Physicians' role in controlling health costs: do no financial harm

There are a lot of people and companies out there who are making, or seeking to make, a profit on delivering health care. I have written about this often. However, it is in fact physicians who control many of the expenditures, and thus the cost; they are the ones who order the tests, prescribe the medicines, use the devices, refer to each other, advise their patients regarding the most appropriate treatment. To the extent that physicians (and other providers who have this power) exert it wisely, judiciously, and appropriately, the cost of care might begin to be controlled. Yes, there will still be tensions between cost and benefit, between benefit to a single person vs. benefit to the whole population, between what the goals of care are, and the degree to which physician choices are limited, but cost consciousness among physicians would go a long way.

It was, therefore, disappointing to read the results of a survey of US physicians recently published in JAMA. In “Views of US Physicians About Controlling Health Care Costs”, Jon C. Tilburt and colleagues randomly surveyed 2665 physicians (a 65% response rate, pretty good) about a variety of issues regarding cost control in health care. Most of those surveyed did not believe that physicians had any major responsibility for controlling health care costs;  it was “the other guys”:

‘Most believed that trial lawyers (60%), health insurance companies (59%), hospitals and health systems (56%), pharmaceutical and device manufacturers (56%), and patients (52%) have a “major responsibility” for reducing health care costs, whereas only 36% reported that practicing physicians have “major responsibility.”’

Whether 50-60% of doctors believing something can be considered “most” is open to question, but there is no doubt that when only 36% of doctors believe that they have a major responsibility, most do not. This is, of course, as I have noted above, incorrect. Do they really believe it? If so, this would imply that they believe that they, and other doctors, are doing all they can already, within the limits of their ethical responsibilities to their patients. However, their responses to other questions in the survey cast doubt on whether they actually are, or even think that they are. While ‘More than 90% of physicians expressed some or strong enthusiasm for -improving conditions for evidence-based decisions, including “expanding access to quality and safety data,” “promoting head-to-head trials of competing treatments,” and “limiting corporate influence on physician behavior,”’, only 51% were strongly enthusiastic about “limiting access to expensive treatments with little net benefit”. Since another 38% were “somewhat enthusiastic”, the article’s contention that it was “relatively strong support” is justifiable; still, it is pretty scary to think that half of doctors are not strongly enthusiastic about this issue.

When it comes to physician reimbursement, it is unsurprising that doctors are very chary of any new models, since most have been doing pretty well with the old ones. Thus, only 7% supported elimination of “fee-for-service” (FFS), in which doctors get paid for what they do (and, as we have often discussed, get paid more for doing more, whether necessary or not, and a lot more for doing procedures) rather than getting a global fee for caring for patients (which, in full disclosure, I have advocated). It is also not surprising that those physicians who were paid salary only or salary-plus-bonus were more than three times as likely to support elimination of FFS. Self-interest is a powerful motivator.

In an accompanying editorial, “Will physicians lead on controlling health costs?”, the ubiquitous Ezekiel Emanuel (former Obama health advisor and now apparently the “go-to” guy on health policy for JAMA and the New England Journal) and Andrew Steinmetz, come to the unavoidable conclusion that, at least for now, the answer is no. This disturbs them, and they spend a lot of time showing why these doctors are wrong. They note that “Not unlike the public, physicians embraced reforms that are sufficiently vague that they may offer only modest improvements but certainly will not transform the health care system,” which seems to be true; if this survey indeed reflects physician opinion, they don’t want transformation of the system. After all, Emanuel and Steinmetz concede, “Change is hard,” but they are very clear that it needs to happen, and the editorial (which I agree with a lot of) tends to get more shrill as it goes on. They take heart in faint positives:

“…not all the results are discouraging. Physicians do seem to recognize that health care costs are important. For instance, 51% strongly disagreed that the cost of a test or medication is only important if the patient has to pay for out of pocket; 85% strongly or moderately agreed that trying to contain costs is the responsibility of every physician; and 66% disagreed that there is too much emphasis on costs of tests and procedures.”

How much hope does it give you that half of doctors do not strongly disagree that cost of medication is only an issue if it is coming directly out of a patient’s pocket? I imagine it gives pharmaceutical companies a great deal. They note that 70% support continuity of care (a good thing, why not?) but add that it is “…another reform not proven to reduce costs or reengineer the system,” losing sight of the fact that those are not the only two goals; providing better care to people is another!

Physicians often don’t want to do the hard work of having to make difficult decisions of what is the best treatment for individuals even considering risk/benefit to the individual, not to mention harder to measure (and more controversial) work of balancing of benefit to the individual vs. the whole society. It is much easier for someone else to make those decisions, allowing you to be free to criticize them and tell your patients “it’s not my fault”. But it is disingenuous. With authority comes responsibility. If physicians want to continue to have significant autonomy in the decisions that they make, they need to take on responsibility for the impact. Saying “I just made this decision because it was best for my patient and I can’t be responsible for overall health costs” is a little like saying that the candy bar wrapper you just chucked out the window of your car isn’t responsible for the garbage all over our roads. More important, and concerning, is the finding that there is little sense of responsibility for choosing the right treatment – not the newest, or most expensive – for the individual.

In a recent JAMA “Viewpoint”, the same issue is addressed by Christopher Moriates and colleagues in “First, Do No (Financial) Harm”[1]. They argue that, in this context, physicians have 4 responsibilities. The first two are innovative and good ideas:

·         Screen for financial harm, i.e., what will it cost this person out of pocket and can they afford it?;

·         Adopt a universal approach, i.e., do with everyone. As with HIV screening, or asking about risk behaviors, don’t assume you can “tell” who is at risk; doing it with everyone means those you ask are not being “singled out”;

The last two are less innovative but equally important, and address what I have discussed above:

·         Understand financial ramifications and value of recommendations, and

·         Optimize care plans for individual patients.

The authors provide a nice “box” showing how this might work for the problem of back pain.

Actually, if one looks at past health reforms, physicians as a group have never been in the lead. AMA shot down both President Truman’s national health insurance proposal and strongly opposed Medicare and in 1965. Change is hard, and it is particularly hard when there is good chance that change will not be beneficial for your pocketbook. But change is necessary. Not necessarily in, or only in, the areas that Ezekiel and Steinmetz focus on (reducing costs and “re-engineering the system”) but certainly in ensuring money is not wasted, quality of care is high, people have trust in their providers, and that the ethical principle of justice – that EVERYONE with the same conditions has access to the same diagnostic and treatment options – is adhered to.

We certainly don’t have the latter, and it is perhaps the most important. People --  doctors, patients and others -- cannot let that concern be lost as we “re-engineer”.

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[1] Moriates C, Shah NT, Arora VM, “First, Do No (Financial) Harm”, JAMA. 2013;310(6):577-578. doi:10.1001/jama.2013.7516.

Status Syndrome: an important determinant of health

This is a guest post by Linda French, MD, who is Chair of the Department of Family Medicine at the University of Toledo School of Medicine.

In a recent blog (Keeping immigrants and all of us healthy is a social task), May 19, 2013), my good friend Josh Freeman wrote about the social determinants of health. When I commented that arguably the most important determinant was missing from his list he suggested that I write this book review blog as his guest. While I had long ago read quite a few papers on the topic of social determinants of health and health disparities that addressed the material that Josh covered in his blog, for me it was an eye-opening experience to read a book a few years ago by Michael Marmot (2004), The Status Syndrome: How Social Standing Affects Our Health and Longevity[1]. I found Professor Marmot’s explanations to provide a unifying idea that resonated with me.

Everyone knows that wealthier people are on average healthier than poorer people. However, it doesn’t follow that wealthier countries, including the United State (US), are necessarily healthier than poorer countries. For example, three countries that I am rather familiar with, Chile, Costa Rica, and Cuba, have life expectancies and other population health statistics that are as good or better than ours despite huge differences in average wealth.

Professor Marmot’s thesis is that, after a minimal threshold, it is not so much absolute differences in material means that makes wealthier people healthier, but rather their perceptions of their social status within their reference group. To quote him,

“The remarkable finding is that among all of these people [i.e. the groups he studied], the higher the status in the pecking order, the healthier they are likely to be. In other words, health follows a social gradient. I call this the status syndrome.”

Professor Marmot is a British physician and epidemiologist from University College, London. His book carefully presents the evidence that it is the psychological experience of how much control you believe you have and your opportunities for full participation in society that is at the heart of social determinants of health.  He presents evidence from many countries and comparisons between them, and evidence related to individuals within different types of social hierarchies, and finally ends with evidence that countries with less inequality are healthier than those with more.

One example that he discusses in detail is that British office workers at the bottom of the office hierarchy have a higher risk of heart attacks than senior managers at the top, while just a generation ago popular wisdom was that highly successful “type A” personality people in stressful jobs were more prone to coronary artery disease.

Before reading his book I had seen some documentaries on primates that suggested that lower status animals had poorer health and reproductive outcomes and shorter lives on average compared with high status animals that was relatively unrelated to sufficient access to resources such as food. In addition I lived for a number of years in Chile as a young adult; my middle class income by Chilean standards was dire poverty by US standards. I was an American expatriate, a status  that was highly regarded in Chile, and also during some of those years I was a medical student. Despite the fact that I was really poor by US standards I was happy and healthy and my children also seemed as happy and healthy as US kids. After returning to the US I read some papers that included data to show that the generation of newly arrived Hispanic immigrants enjoy relatively good health outcomes, which deteriorate in subsequent generations despite the fact that the families have acquired more material wealth in absolute terms. No good explanations were included for the findings in those papers. After reading The Status Syndrome it made sense to me. The initial immigrants were probably using their country of origin as the social reference and subsequent generations had a US social frame of reference. I concluded that minority groups in this country have health disparities in large part due to the experiences of inequality and discrimination relatively more than due to absolute access to material means or even specific services - including health services.

In the latter part of his book Professor Marmot demonstrates that the countries with the best health statistics in the world are those that are both relatively wealthy and more equal. Examples of such countries are Sweden and Japan. On the other hand, countries at the other end of the spectrum present a reaffirming contrast. He spends the latter part of the book arguing for a political agenda in favor of reduction in social inequality.

If you haven’t figured it out by now, I highly recommend this book. It will transform how you think about the social determinants of health.

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[1] Marmot, Michael. The Status Syndrome: How Social Standing Affects Our Health and Longevity. Owl Books. Henry Holt and Company. New York. 2004.

Insufficient outrage: is health care about helping people or enriching providers?

The NY Times has been running a series of articles on the cost of health care, which presumably have engendered anger and frustration in many, if not most, readers. I discussed one of them,  “The $2.7 Trillion medical bill”, on Jul 28, 2013 (The high cost of US health care: it's not the colonoscopies, it's the profit). It used colonoscopies as an example of why we have such high health-care costs. A more recent piece on the cost of delivering a baby, Paying Till It Hurts: American Way of Birth, Costliest in the World (July 1, 2013) documents the cost of that procedure. Many letters followed, most irate and some discussing the conundrums; for example, our expectation of every birth and baby being perfect, backed up by the threat of lawsuits, requires the presence – and frequently deployment – of enormously high-tech resources for every normal delivery.

One particularly articulate and irate response came in an Op-Ed by H. Gilbert Welch, a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice, “Diagnosis: Insufficient Outrage”, published July 4, 2013. Welch states that he is “…not talking about a violation of federal or state statutes, like Medicare or Medicaid fraud, although crime in that sense definitely exists. I’m talking instead about the violation of an ethical standard, of the very “calling” of medicine.” He goes on to carefully describe both the incredible increase in prices for medical care and the excess use of the procedures that cost the most. He adds that the prices are only partially felt by the end-user (people) because Medicare, Medicaid and commercial insurers pay far lower amounts than the posted prices, but that the portion paid by people is going up, and of course the uninsured are charged full price. He notes that “They are largely young and employed (albeit poorly) and have little education,” although in fact many are older, and unemployed (remember Medicaid insures only poor people, but far from all poor people).

His description of the huge prices ($108 for a $5 tube of ointment, etc.) has become familiar, and is reminiscent of the $100 hammers bought by the Defense Department several decades ago. Less familiar, but at least as scary, is the increase he describes in charges that come solely from the purchase of physician practices by hospitals, which allows them to charge the higher fees that Medicare allows hospitals, called facility fees. In one place where this was done, the amount paid by Medicare for an electrocardiogram went up from $200 to $471, and for a colonoscopy from $2000 to $8000, in one year for the same procedure in the same location.

Welch says that “The word ‘crime’ is awfully strong. Many prefer to call all this a problem of perverse incentives: good people, working in a bad system,” but it is pretty clear that he has not convinced himself, not to mention me. And yet, I know the pressures that physicians and hospitals are under to make more money. After all, hospitals are run by businessmen, and buying up all those physician practices and having to pay the doctors does not come cheap, especially when insurers, particularly Medicare, are focusing on saving money by reducing their reimbursements.  It is a fascinating, if not encouraging, situation, where I can read all these exposes of medical excesses and then go back to work and hear from our own hospital leaders what strategies that they are going to need to employ to continue to make money in a challenging and competitive environment.

Welch says that “Medical care is intended to help people, not enrich providers.” I agree, and maybe you do too, but there is an enormous industry built around medical care and lots of providers (doctors and hospitals and owners of various for-profit facilities, not to mention the pharmaceutical and device industries, and insurance companies) who are indeed getting very rich. And many of them are running very scared that their riches will decrease. If we want a medical care system that is indeed intended to help people rather than enrich providers, there needs to be a major change in the way that it is paid for. We need to devise a system that encourages the provision of high-quality, appropriate care to everyone who needs it. And does not provide unnecessary or potentially harmful care to anyone. And is not so complicated that it encourages work-arounds to cherry-pick profitable patients or do more profitable procedures.

For starters, we need to have one payer, a single payer for everyone so no people are “more desirable” or “less desirable” based upon their insurance coverage (or lack thereof). That system needs to have a component (not the RUC, see Changes in the RUC: None.. How come we let a bunch of self-interested doctors decide what they get paid?, July 21, 2013) that evaluates what a reasonable cost is for that care, including a reasonable profit margin for the provider. It needs to have a component that evaluates new technologies to assess whether they offer benefit over existing diagnostic and treatment modalities, and to whom, and to not encourage over-proliferation of expensive technologies (such as the proton-beam accelerators Welch describes) because  “if we don’t have one, they’ll go to the other guys”. Incredibly expensive technologies, such as proton-beam accelerators, should be purchased by the single payer system, regionally administered, and available to everyone. 

The profit-making competitive marketplace works for many goods and services. It has no place in our health care.  

Why poor people choose ERs: we need a system designed to meet everyone’s needs

“Understanding Why Patients Of Low Socioeconomic Status Prefer Hospitals Over Ambulatory Care”[1], by Shreya Kangovi and her colleagues in the July, 2013 issue of Health Affairs, tries to help us answer that question in order, presumably, to help re-design ambulatory care in order to change that preference. A general assumption of health policy is that use of hospital emergency rooms for “routine care” is expensive, inappropriate, provides worse patient outcomes, distracts emergency room staff from caring for the true emergencies that they are presumably there for, and is a significant cause of the overall high health care spending in the US. Although the whole article is available on-line only to Health Affairs subscribers, a summary is presented on the Robert Wood Johnson Foundation (RJWF) website, because Dr. Kangovi was an RJWF Clinical Scholar.

The authors conducted a qualitative study interviewing 64 people who frequently used the emergency room as their source of medical care, using trained community members to engender greater trust on the part of the patients, mostly lower income African-Americans, to conduct the interviews, in two hospitals in the Philadelphia area.  “Study respondents (both the insured and uninsured) explained that they consciously chose the ER because the care was cheaper, the quality of care was seemingly better, transportation options were more readily accessible, and, in some cases, the hospital offered more respite than a physician’s office.”

These findings should be surprising to many students of public policy, but they were the legitimate perspectives of the people who were using these services, those Kangovi correctly notes, whose “…voices are seldom heard in policy discussions.”  Understanding their concerns is critical, not because they are always “right”, or represent everyone, but because those concerns reflect their experiences, and the degree to which our current strategies are not working, and the degree to which our future strategies are unlikely to work if they do not take into consideration these issues. Three themes generated by the researchers, with supporting quotes from the folks who were interviewed:

• Convenience. “You must call on the same day to set up a [primary] care appointment … whenever they can fit you in.” This open-access scheduling resulted in people taking days off from work and still being unable to see a doctor. It also made it impossible for many to access transportation covered by Medicaid because the transport arrangements had to made 72 hours in advance. Late hospital hours also made care more available.  
• Cost. “I don’t have a co-pay in the ER, but my primary [physician] may send me to two or three specialists and sometimes there is a co-pay for them. Plus there’s time off from work to go to several appointments.”
• Quality. “The [primary care doctor] never treated me or my husband aggressively to get blood pressure under control. I went to the hospital and they had it under control in four days. The [physician] had three years.”

Any health care provider who has worked in an ER or in ambulatory care can validate these concerns, and also respond to them. The most obvious is Cost. Obviously care in an ER is not free; indeed the cost is a major driver of efforts to get people to not use it. But the patient, at the time of service, doesn’t have to put down cash, put down a co-payment, put down real money now. There will be a bill, but that will be something that goes on their (likely existing and mounting) debt burden.

Convenience is, perhaps, a poor choice of words; it suggests something purely volitional, as if people were choosing to have their hair done during the day rather than go to the doctor. Convenience in the way that a middle class person understands it is not what these folks are talking about. They may not have a car or a family member with one (or perhaps it is being used by a family member to get to work), public transportation may be unavailable, unreliable or inaccessible to them given their medical problems, and if they have jobs, they are often not those that just allow you to take a sick day to go to the doctor, but mean they lose pay. Despite efforts to have “extended hours”, most ambulatory care offices are open mainly during regular business hours, during the day weekdays, when the folks who work there want to work, not when it is necessarily most “convenient” for patients. Let’s get this straight, it is not “convenient” to wait 6 hours in an ER to be seen; if this is better than the alternative, the alternative is seriously flawed!

Quality is another issue, and the quotation chosen is very open to criticism. The hospital had 4 days of complete control of the person’s life, giving them their medicines and minimizing any external issues, while the doctor had 3 years in which the person was responsible for taking their medicine, choosing their diet, and deciding where to rank health among the many competing priorities in their lives. As any of us who have worked in medicine know, the control that was achieved in the hospital may well evaporate once someone is back in their regular environment.

Really, this is largely an issue of money, of resources. The authors emphasize that not all the patients were uninsured, but those who had insurance almost all had Medicaid. Not only is Medicaid not equivalent to private insurance (it pays less and lots of doctors do not take it) but it is only available to really poor people. People who are poor enough to have Medicaid have all those issues listed above under “Convenience” and “Cost” that go beyond the direct cost of medical care, but inform every decision that they make in their lives.

Policy is made, in almost every area, by the “haves”, those with money and political power. At the rawest, it is a blatant example of “let’s do for us, and screw those without power”, as for example the farm bill that cuts food stamps for the neediest while continuing support for giant agribusiness (well discussed by Paul Krugman in  “Hunger Games, USA”, NY Times July , 2013[2]). More subtly, and with much less intentionality, not to mention hostility, it is made from the perspective of people who have a lot, who cannot even imagine the lives, decisions, and trade-offs made every day by “have-nots”. The “haves” may identify a lot that is wrong with the health care system, but they do not even think of things like not having transportation, or not being able to take off from work to go to clinics open during working hours, or not having childcare. They are not mean people, but they do not see.

In her comments, Kangovi looks at plans to develop Accountable Care Organizations (ACOs). “Our findings suggest that these efforts could backfire by making hospitals even more attractive to these patients. We also debunk the notion that people from these groups abuse the emergency room for no reason and need to be taught how to use it properly.”  The real issue is that there are not the financial incentives to provide high-quality care that is accessible in terms of both cost and the other obstacles people face (e.g., transportation, childcare, office hours). The financial incentives are to try to avoid these patients all together, keep them out of the ER, keep them out of your office; to develop “Patient-Centered Medical Homes” that are centered around the kinds of patients you want to have, and not those you would rather not have show up (and go to the ER!).

We need a system that, first of all, ensures that taking care of everyone is (at least financially) desirable. That means a system in which everyone has the same insurance coverage (a single-payer system), and one that is designed to pay more when providing care for people with greater needs, both medical and social. We need a wrap-around system that enables the most needy to have access to the transportation, childcare and other issues that they need to be able to utilize their medical coverage, and to the education, jobs, food, and housing that they need to be able to have a reasonable chance at health. We don’t need a patchwork system of “good ideas” that do not, in themselves or together, create a real safety net for people.

If we have one that is so full of holes that gaming it for profit is the main activity of hospitals, doctors, and other providers, we have no reason to be critical of the least powerful finding the ways around it that work best for them.

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[1] Kangovi S, et al., “Understanding Why Patients Of Low Socioeconomic Status Prefer Hospitals Over Ambulatory Care” , Health Aff July 2013   vol. 32  no. 7  1196-1203; doi: 10.1377/hlthaff.2012.0825  

[2] Krugman indicates the logic “…goes something like this: ‘You’re personally free to help the poor. But the government has no right to take people’s money’ — frequently, at this point, they add the words ‘at the point of a gun” — “and force them to give it to the poor.’  It is, however, apparently perfectly O.K. to take people’s money at the point of a gun and force them to give it to agribusinesses and the wealthy.”

The high cost of US health care: it's not the colonoscopies, it's the profit

On June 2, 2013, the Sunday edition of the New York Times ran a major investigative article by Elizabeth Rosenthal called “The $2.7 Trillion medical bill”, with the subtitle “Colonoscopies explain why the US leads the world in health expenditures”. It is a damning article about the US health care system, and the fact – fact – that our costs are much higher than those in other countries but our outcomes are often worse, and large portions of our population are not even covered.

Of course, it is not all colonoscopies. Yes, the average cost for a colonoscopy in the US is $1,155 compared to $655 in Switzerland (for example). And many cost much more; in the first paragraphs of the article we hear about charges of $6,385, $7,563.56, $9,142.84 and $19,438 -- “…which included a polyp removal. While their insurers negotiated down the price, the final tab for each test was more than $3,500.” ! But the graphic at the top of the article compares US prices for other common procedures with those of other first-world countries: Angiogram $914 US, $35 Canada; hip replacement $40,364 US, $7,731 Spain; MRI $1,121 US, $319 Netherlands; Lipitor (atorvastatin, a drug to treat high cholesterol) $124 US, $6 New Zealand.

But colonoscopies provide a good example for why we pay so much more for procedures – and it is not because they are of higher quality:

“Colonoscopies… are the most expensive screening test that healthy Americans routinely undergo — and often cost more than childbirth or an appendectomy in most other developed countries. Their numbers have increased manyfold over the last 15 years, with data from the Centers for Disease Control and Prevention suggesting that more than 10 million people get them each year, adding up to more than $10 billion in annual costs. Largely an office procedure when widespread screening was first recommended, colonoscopies have moved into surgery centers — which were created as a step down from costly hospital care but are now often a lucrative step up from doctors’ examining rooms — where they are billed like a quasi operation. They are often prescribed and performed more frequently than medical guidelines recommend.

The high price paid for colonoscopies mostly results not from top-notch patient care, according to interviews with health care experts and economists, but from business plans seeking to maximize revenue; haggling between hospitals and insurers that have no relation to the actual costs of performing the procedure; and lobbying, marketing and turf battles among specialists that increase patient fees.”

Welcome to the world of for-profit health care. Where the principle of “maximize profit” determines what health care institutions do. Where “what we do” (our “product”) is health care, but we prefer to do it on those with really good insurance. Where we adjust our charges to maximize the difference between what it costs us and what we are paid. Where the rules set by insurers or government with the aim of regulating costs are seen as challenges to be gamed for maximum profit. The movement of colonoscopies – and many other procedures – from doctors’ offices to “surgi-centers” is a great example. If performing colonoscopy in an office was unsafe, moving to a surgi-center might be a good idea, but there is little evidence that it was. Moreover, the increased price for performing a procedure in such a center far exceeds the increased cost of doing it there; the reason for the move is not patient safety, but taking advantage of a loophole to be able to charge more.

Rosenthal’s article is a long one; it extensively documents both the high cost of health care in the US and the reasons why it is so high, which are rarely related to quality. This is illustrated by an article published in the Times a few weeks earlier, “New Jersey hospital has highest billing rates in the nation”, by Julie Creswell, Barry Meier, and Jo Craven McGinty. “The most expensive hospital in America is not set amid the swaying palm trees of Beverly Hills or the luxury townhouses of New York’s Upper East Side,” they write, but Bayonne Medical Center, in Bayonne, NJ, where the average charges are 4.1 times the national average charge, not to mention what Medicare will pay. For some services it is much higher: “Bayonne Medical typically charged $99,689 for treating each case of chronic lung disease, 5.5 times as much as other hospitals and 17.5 times as much as Medicare paid in reimbursement. The hospital also charged on average of $120,040 to treat transient ischemia, a type of small stroke that has no lasting effect. That was 5.6 times the national average and 23.6 times what Medicare paid.”

How can they get away with this? Who will pay them so much? After all, if I can buy a Chevrolet for $25,000 at one dealer in town, why would I pay $75,000 for the same car somewhere else? Ah, but health care is different. For one thing, you might be sick when you have to find a hospital to care for you, and you might live in Bayonne! Of course, Medicare will only pay what Medicare pays, but if you have most types of commercial insurance (not to mention, of course, if you are uninsured), it is another story. To guard against excessively inflated charges, most insurers have contracts with providers (hospitals, doctors, etc.) that determine how much they will pay for a procedure or treatment of a disease. This saves the insurer money. In addition, in order to encourage you to go somewhere that they have negotiated these lower rates, “in-plan” hospitals, they pay a lower percent of the cost – and you pay more – if you go “out of plan”.

And it is precisely this effort to control costs that many for-profit hospitals (like Bayonne) have turned on its head to generate greater income. They have gone “out of plan” for all health plans. This means that when you show up in their ER, or are admitted, you have a higher co-pay, and co-insurance charge, and the insurer pays them more money. Which is why the insurer doesn’t want you to go there, and you might (once you knew this) not want to go there either. Except, of course, you’re sick, and you live in Bayonne, and it is the closest ER. Talk about gaming the system!

Spending & Coverage (2010)	France	U.S.
Total health spending per capita	$3,974	$8,233
Government health spending per capita	$3,061	$3,967
% uninsured	0%	15.7%
Health outcomes (2010)
Life expectancy at birth (2011)	81.3 yr.	78.7 yr.
Infant mortality per 1,000 births	3.6	6.1
Costs per episode (2012)
Doctor’s office visit	$30	$95
Hospital day	$853	$4,287
Angioplasty	$7,564	$28,182
Appendectomy	$4,463	$13,851
Childbirth delivery (normal)	$3,541	$9,775
Hip replacement	$10,927	$40,364
Heart bypass	$22,844	$73,420
Tests (2012)
Abdominal CT scan	$183	$630
Angiogram	$264	$914
MRI	$363	$1,121
Name-brand drugs (30-day prescription, 2012)
Cymbalta	$47	$176
Lipitor	$48	$124
Nexium	$30	$202
Sources: Organisation for Economic Co-operation and Development and International Federation of Health Plans.

I have implied that much of the reason for the high cost of health care in the US is the high cost of procedures. Frankly, that is true. It is why procedural specialists make so much more than primary care physicians. This is why decreasing the difference in income potential for proceduralists and primary care doctors would be good for everyone and save money: there would be more people doing primary care and less incentive to do unnecessary procedures. Consumers Report, in its July 2013 issue, has an article on the patient-centered medical home (PCMH) movement, which seeks to achieve the “triple aim” of higher quality, greater patient satisfaction, and lower cost. The article, “A doctor’s office that’s all about you”, also addresses the high cost of care in the US, comparing it specifically to France, which spends 11.6% of its GDP on health care and  “…is generally acknowledged as having one of the world’s best health care systems.” Needless to say, the comparison is not flattering to the US, which spends 17.6% of GDP on health care.

Richard Wender, MD, a leader in US family medicine, commenting on the “Colonoscopies” article, says “Using health care as a driver of corporate economics as opposed to a public good is the fundamental cause of our medical inflation.” Lee Green, MD, an American who is now a family medicine leader in Canada, adds “Having practiced most of my career in the US, and now practicing in Canada, the contrast is quite evident. The US health care system is not designed to get you the care you need, it is designed to get you the care that someone can make a profit giving you. If you're poor and uninsured, that's none - no matter how much you need it. If you're well-insured, it's a lot - including quite a bit you don't need, and even some that is harmful.”

This is crazy. We know the problem, and we know the solutions. All we need is the will to implement them. Maybe this continued exposure will generate it. We can hope so.

Changes in the RUC: None.. How come we let a bunch of self-interested doctors decide what they get paid?

On February 2, 2011, I posted a piece titled Outing the RUC: Medicare reimbursement and Primary Care, describing the activities of this group, officially the “Specialty Society Relative Value Scale Update Committee” but known as the RUC, which is convened annually by the American Medical Association (AMA) to set the relative value of different kinds of work done by doctors. I included the accompanying graph, from the Robert Graham Policy Research Center of the American Academy of Family Physicians (AAFP). It shows the relative income of different specialists over time (FPs are the line at the bottom) and suggested that this might well impact specialty choice by students. I noted that the reason for the income disparities was the different weight given the work done by different specialists, and that the RUC was dominated by subspecialty societies. I pointed out that the real problem is that this encourages expensive procedures (by making them expensive) and that this skews the entire health care system.

I did not, however, call the RUC “The shadowy cartel that controls Medicare”. No, that is the title of a lengthy recent investigative piece in the Washington Monthly by Haley Sweetland Edwards that documents, in detail, the creation, formation, function, and results of the RUC’s activities that justifies this sobriquet. The problems documented are profound. Medicare has to pay for the work that doctors do, and it is pretty obvious that performing heart surgery should be paid more than freezing a wart. But how much more? And how does that relate to your doctor’s office visit or doing and interpreting a CT scan? And that doctor’s visit; is it for a cold or to manage 5 different chronic diseases? It’s complicated stuff. So the Center for Medicare and Medicaid Services (CMS) relies (90% of the time or more) on the recommendations of the AMA-convened RUC.

Note, above, that in the full name of the RUC the term “specialty society” is included; the members of the RUC are appointed by medical specialty societies, but are then told to then be completely objective and not look out for the interests of those societies, the specialists, or themselves! “Put your RUC hat on,” Edwards describes the chair of the committee telling its members, But even if you believe that this is possible, the outcome of RUC decisions would demonstrate that it is not in fact the case (“…in talking to a half-dozen current and former RUC members, including both generalists and specialists, the image of the committee that emerges is less a gathering of angels, cloaked by some Rawlsian Veil of Ignorance, and more akin to a health care-themed Game of Thrones.”) While the RUC only makes recommendations for Medicare, because all other payers base their payment rates upon Medicare, it is essentially controlling the cost of the entire health care system.

Medicare spending is like a pie, a fixed amount of dollars divided up based upon RUC recommendations. The original basis for this division, the Resource Based Relative Value Scale (RBRVS), developed by William Hsiao, may not have been equitable for primary care, but the modifications since then have been a disaster. When the first Bush administration gave the task of making these decisions to the AMA, “…the most powerful interest group in the industry,” Hsaio says “…that was the point where I knew the system had been co-opted….It had become a political process, not a scientific process.”

Edwards goes on, in great detail, to show the ways that the AMA maintains power – and makes lots of money – by controlling the RUC and the charge codes that are associated with it. And also describes, in detail, how it has a negative impact on primary care (“These manipulated prices are also a major reason why specialists are in oversupply in many parts of the country, while a worsening shortage of primary care providers threatens the whole health care delivery system. It’s precisely because the RUC has overvalued certain procedures and undervalued others that radiologists now make twice what primary care docs do in a year—that’s an average of $1.5 million more in a lifetime”) and why (“While the primary care docs make up roughly 40 percent of physicians nationwide, they have only 14 percent of the votes on the RUC.”). I would argue with the math, though; over a 30-year career every $100,000 of additional annual income results in an additional $3 million in lifetime income, and many sub-specialists earn several times $100,000 more than primary care doctors.

The idea of having independent, non-governmental, groups advise on policy is not necessarily a bad one. An excellent example of this is the US Preventive Services Task Force (USPSTF), which makes recommendations, based on the scientific evidence, about which preventive tests are effective and which are not. In Guidelines, bias, and your health, June 30, 2013, I cite an article by 2 USPSTF members who are concerned that by tying payment for services to positive recommendations by USPSTF, the Affordable Care Act (ACA, “Obamacare”) could politicize their work. The RUC has no such compunctions. While USPSTF is intentionally composed mostly of primary care physicians and examines only the scientific evidence, the RUC is dominated by specialists, who are appointed by specialty societies, who have a great financial stake in its decisions. And if the cartoons attached depict the doctors as poker players, the AMA is the “house”, which not only takes a cut of all decisions, but owns them and sells them back to anyone who wants to use them.

Edwards’ article is full of quotes from important – especially those who were formerly important in public life, both Republican (e.g., Gail Wilensky and Thomas Scully, heads of CMS during the GHW Bush and GW Bush administrations respectively) and Democratic (e.g., Bruce Vladeck, who headed CMS under Clinton), who are extremely critical of the entire process behind the RUC, see it as corrupt, and see it as a major contributor to a US health system that spends incredible amounts of money in a wrong-headed, upside-down way to reach mediocre health outcomes. Unfortunately, none of them changed it when they had government power (if they even tried to).

I would like to add two notes:

1. All specialists are not paid the same. Some (e.g, psychiatrists, some subspecialty pediatricians, some neurologists) are earn much the same as primary care doctors. Some (e.g., radiologists, orthopedic surgeons, neurosurgeons, anesthesiologists) earn several times more. Much of this is built into the RBRVS, which vastly overvalues procedures compared to cognitive care, and exacerbated by the RUC.
2. The last time I wrote about the RUC, I received a response from the AMA (AMA response to "Outing the RUC", February 5, 2011). It said "The entire premise of this column is false.” If you wish, you can read my reply in that blog piece. Nice to know they read it.

In summary, the flaw is not just the RUC, but the entire nonsensical non-system of medical care we have in the US. Medical care should be paid for by a single payer, and rates determined by an independent body without a financial stake in the outcome. Health care should be a lot more than simply medical care. And the health of our people will be most impacted by investment in the core functions of society: housing, food, education and jobs.