Today’s Managing Health Care Cost Indicator is $152 billion
Arnold Relman, a former editor of the New England Journal of Medicine, has a long piece on health care in this week’s New York Review of Books. I especially liked the title: “How Doctors Can Rescue Health Care.” I was hoping that he would emphasize that even in our system riddled with administrative waste and resource-consuming middle men, most health care dollars are spent in the delivery system, and physicians determine how much health care is going to be delivered in many or even most instances.
Relman diagnoses three main problems with current efforts at health care reform
· The Affordable Care Act increases our reliance on private health plans. He states the overhead and profits of private health plans add $152 billion to our annual health care bill.
· The Affordable Care Act doesn’t change fee for service, which encourages higher utilization
· The Affordable Care Act does not decrease the fragmentation of health care, and he is skeptical that the Accountable Care Organizations will take off based on provider pushback.
He also notes that the prospect of the Independent Patient Advisory Board helping to bring more evidence to health care decision-making is dim, concluding that the constraints on the IPAB will lead it to suggest price cuts and benefit reductions rather than ways to actually improve care.
Relman doesn’t spare opponents of the Affordable Care Act, either, stating that “Republicans in Congress have pretty much limited their health policy to an unyielding opposition to “Obamacare,” to calls for reform of malpractice litigation, and to their traditional reliance on “market forces.” He notes that Paul Ryan’s Medicare plan would substantially increase patient cost sharing.
Relman finds hope in the consolidation of provider systems with physicians increasingly salaried employees. He notes that surveys from the American Medical Group Association and the American Hospital Association suggest that as many as a quarter of American physicians are now employed in multispecialty groups. However, he states that the current payment system limits how many costs will be saved even in these systems without intrinsic incentives to overutilize care.
He suggests, with more than a whiff of magical thinking, that as more people see the value of these integrated systems, we’ll start having a real discussion about payment reform, and he states
… It might become easier to pass legislation that created a system based on a tax-supported single-payer system, with prepaid comprehensive care for all. Obviously, there is no guarantee this would happen. Indeed, the odds would still be against it. But if most physicians were to be employed in multispecialty groups, the growing number of practitioners now supporting major reform would probably become a strong majority. This could well change the climate of opinion enough to influence legislation.
I’m not convinced. I like multispecialty groups because I think they can deliver tightly integrated care, use teams that include robust roles for nonphysicians, and think about an entire population, rather than just the patients in that day’s schedule. But tightly-integrated multispecialty groups require large capital investment, and there are few markets (
San Francisco, ) where such groups are dominant. Kaiser and the clinics in the upper Midwest and the Minneapolis Pacific Northwest have cultures that have been built over many decades, and current physicians who highly value autonomy are not going to coalesce into Kaiser-like groups across the country in just a few years. Further, there is good evidence that provider consolidation is actually raising costs.
Relman deeply dislikes health plans, especially for-profit health plans. However, even Medicare is largely administered by private (for-profit) claims administration companies. Further, health plans are big businesses. The top five have market capitalization of almost $120 billion and United Health Care alone says it employs over 70,000. They are not going away any time soon!
I think Arnold Relman got the headline right, though. Physician bills represent less than 20% of all medical costs – but physicians play a pretty substantial role in determining how much we’ll spend on everything else. We spend too much on
· Drugs (we use too many brand name drugs when generics would do just as well)
· Hospitalizations (we have too many readmissions among the elderly, and use expensive academic medical centers when community hospitals would be just fine)
· Medical devices (don’t get me started on the overuse of implantable defibrillators)
· Dialysis (with worse results than the rest of the developed world)
Physicians can rescue health care – and many around the country are working hard to implement
or Lean techniques – others are doing process reengineering to eliminate unnecessary steps, and some are learning from Disney and other great retail and consumer products companies about how to better meet the needs of the customer, aka patient. Toyota
But I don’t think physicians being more discrete in their use of medical resources will lead to the collapse of the current health care finance system, as dysfunctional as it is.