Managing Managed Care

Our inequitable, inefficient, oftentimes uncaring health care "system," revealed. -- Jeffrey G. Kaplan, M.D., M.S.

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"But, My Patients Are Sicker!"

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The Commonwealth Fund contends that: reforms physicians could champion to eliminate waste and duplication (inefficiency) include, but are not limited to: "integrated systems of care,""shared savings, bundled payments, or global fees" and "performance measures that promote care coordination." I say that docs aren't happy about any of that.  I can hear them now....

Here's what i hear docs saying with regard to Affordable, Accountable, or Managed Care:   I'm too expensive? But, my patients are sicker!     I'm not going to be conservative about the tests or referrals I order; it's my license, isn't it?  Take on risk? Why should I?   Worry about the 'downstream costs'? I can't control what the specialist does?   I cannot be responsible for what the patient doesn't do (for themselves).   Controlling the costs of care?  All you are really doing is  cost-shifting and squeezing us.  Patients are saying:  you are squeezing us;    Health care insurance? It's just  them running your business with my money.    IOW, you are cost-sharing with multi-tiered pharmacy 'benefits' and you are all about bureaucratic hurdles HMOs practicing medicine without a license!.    As a former medical director, on the other hand, I'd say current attempts to eliminate waste and duplication (anything from dishonesty to inefficiency) doesn't go nearly far enough.

Ref.: "Physicians Can Lead Health Care Reform Through Payment and Delivery System Reforms Linked to Guaranteed 1.5 Percent Annual Savings in Health Care Costs and Health Coverage for All."

Inefficiency and Little Benefit Yet We Spend More and More

While the United States medical system is famous for drugs costing hundreds of thousands of dollars and heroic care at the end of life, it turns out that a more significant factor in the nation’s $2.7 trillion annual health care bill may not be the use of extraordinary services, but the high price tag of ordinary ones.

The Costs of Medical Care Spirals UP Even As It Threatens Our National Financial Viability

"The United States spends about 18 percent of its gross domestic product on health care, nearly twice as much as most other developed countries. The Congressional Budget Office …. identified federal spending on government health programs as a primary cause of long-term budget deficits.  …. A major factor behind the high costs is that the United States, unique among industrialized nations, does not generally regulate or intervene in medical pricing, aside from setting payment rates for Medicare and Medicaid, the government programs for older people and the poor…” Consider that patients are consumers who “do not see prices until after a service is provided, if they see them at all. And there is little quality data on hospitals and doctors to help determine good value, aside from surveys conducted by popular Web sites and magazines. Patients with insurance pay a tiny fraction of the bill, providing scant disincentive for spending.”  It is sad, indeed, that  health care practitioners are so often clueless about the costs of tests and procedures (even when they are on their own selves).  If you ask a doc why s/he is so costly, they'll retort, my patients are sicker, I'm worried about malpractice, See what the specialists get for doing what I can do, etc. They don't pay me for patient education, phone calls, prescribing over the phone, mental health care, or my colleague's mistakes.

Blatant Abuse and Overcharging

“In Mount Kisco, N.Y., Maggie Christ had two colonoscopies two months apart, after her doctor decided it was best to remove a growth that had been discovered during the first procedure. They were performed by the same doctor, with the same sedation. The first, in an outpatient surgery department, was billed at $9,142.84 (insurance paid $5,742.67). The second, in the doctor’s office, was billed at $5,322.76 (insurance eventually paid $2,922.63) because there was no facility fee. ‘The location was about accommodating the doctor’s schedule,’ Ms. Christ said. ‘Why would an insurance company approve this?’”

Physician Induced Demand

There is wide variation in the incidence of colonoscopies, in anesthesia assistance and in follow-up care.  As Jack Wennberg (of small area variation analysis) observed, unwarranted variation should raise questions.  To that point, while medical experts are questioning why anesthesiologists are involved at all with “moderate sedation,” (e.g., using propofol), from 2003-2009 in the U.S., anesthesiologists’  attended colonoscopies twice as often and their payments quadrupled .[RAND Corporation study, pub. 2012]. Ending that waste and duplication for “healthy patients could save $1.1 billion a year without appreciable loss of benefit. Unfortunately, living in a litigious society as we do, we find many gastroenterologists silent about spending someone else’s money this way.

Rosenthal E. “The $2.7 Trillion Medical Bill; Colonoscopies Explain Why U.S. Leads the World in Health Expenditures.” NY Times, pub. Online June 1, 2013


In essence, we are discussing the "value" of health care, the 'bang for the buck," as it were. How do we improve it?  In "The Nexus of Quality and Cost," I use the "value equation" to explore the relationships of the major factors that one must take into account in managing any health care organization–quality, cost-effectiveness and access. The information one needs in such an endeavor includes, but is not limited to:

  1. "Who" does "what," "where" and "when" and "how well."
  2. 'Apples must be compared with apples.' In other words, we need to know how sick the patients are; this is called "acuity" or "case mix" adjustment. [For further information, see Thompson, Averill, Fetter. "Planning, Budgeting, and Controlling- One Look at the Future: Case-Mix Costs Accounting."  Health Services Research. 1979]
  3. The best construct with which to view care is a comparable, longitudinal picture of all care over time, regardless of setting and that is called an "episode of care."