Tuesday, July 28, 2009

Follow-Up: If we REALLY wanted to fix healthcare, we'd put the patients in charge, not the government!

If you lived in quaint Europe 100 years ago, it would have taken you most of the day to shop and prepare meals. You'd have to make separate stops at the local butcher, baker, grocer, and so on. If the dairyman had no more butter, you'd just have to live without it. If the local miller sold sub-standard, gravelly flour, you'd just have to eat it that way. And since there was no refrigeration, you had to repeat the whole shopping process every day. Fast forward to today, and you can stop at the Super Wal-mart on the way home from work to pick up an incredibly broad diversity of foods at quality incredibly higher. Strangely, healthcare, the Jurassic Park of industries, hasn't had to go through the same evolution. As a result, its tragically inefficient, with quality tragically uneven, at costs tragically high.

Who could disagree with a new healthcare industry that focuses relentlessly on Efficiency, Transparency, Customer (=patient) Satisfaction, and Objective Effectiveness? The devil, of course, is in the dollars ... but not in the way Congress keeps telling you.

All the hype and sob-stories aside, the bottom line problem with US healthcare is that the consumer doesn't get to choose, and doesn't have to pay. The consumer is not empowered.

This can be seen in, for example, the dysfunctional, polygamo-incestuous oligopoly of employer-subsidized insurance. Lose your job and lose your health insurance? Dumb.

The same issue can also be seen within individual insurance plans. Coverage and treatments are black or white, take it or leave it, as opposed to a menu of shades of grey to better fit individuals' situations, expectations, and desires.

Health law and privacy are similarly all-or-nothing. Even when no other treatment works, experimental or alternative approaches are shunned by doctors simply on the basis of legal or bureaucratic grounds. Despite best intent, and even if the patient is warned of heightened risks, one unforeseen turn for the worse is likely to cost even a stellar a doctor or nurse a career. Why risk it? Doctors are afraid to consult anyone else about tough cases. Privacy? We can't even see our own health records, much less share them with others who might help.

Healthcare reform must be addressed on multiple fronts, but if consumer empowerment is a clear path to mitigating a multitude of our issues, why not fix it first? See what issues resolve themselves when people are informed and empowered. THEN size up the residual problems and start making the tough, expensive choices.

Arranging healthcare for the poor and sick is a good goal. Obama's pet "public option" does improve the lot of a certain subset (the poor, the sick, and inevitably the lazy). Sadly, those unfortunate souls may find that they were better off before the plan. Obama demonstrates his demagoguery by placing the lion's share of the financial burden on "the rich." Surcharge expensive health plans; surcharge businesses; surcharge small business owners; surcharge benevolent folks; surcharge those who earn the most; hell, just surcharge Goldman Sachs directly while you're at it. But what happens when costs overrun budgets, as they have in nearly every other public health plan (Hawaii, Massachusetts, Canada, and the UK just to name a few familiar examples)? Does the government begin to ration care, as in Canada? Cancel the plan, as in Hawaii? Or just flat deny coverage, as in Britain?

Moreover does the public option even empower consumers? Does it ensure patients and doctors decide what treatments are best? Or does it give that power to an unaccountable, appointed board of politically-charged "wise men" in DC? Does it increase competition for better ideas, treatments, and service? Or does it simply tilt the playing field toward one plan, one way of doing things, and one group of administrators who get to play by a different set of rules than the rest? Does it "crowd out" other insurance plans because it's better? Or by the fiat of unfairly preferential treatment, enshrined in Federal law? Do we really want a Fannie and Freddie for healthcare? Or Apple and Google?

My take: the public option erodes choice (and thus empowerment) when it should be fostering it.

As I advocated over a year ago in this blog entry, a better plan would decentralize control to those who have the strongest interest in getting it right: the patients. This would naturally put a burden on their primary health providers to ensure patients were informed with the best facts and recommendations, so they could make the best choices. As I put it in my earlier blog:

There is no measure of supply and demand driving the rates of top doctors up or warning me against going to cheap-o ones. Insurance companies (and Medicare) engage in collective bargaining to drive rates down for some, but it's like squeezing a balloon - the air just moves around inside - there's no net savings. Horrifying though it may be for you to think of being sick and having to bid on some Medical eBay for a spot at the best hospital, this would drive overall costs DOWN by rooting out inefficiency, inappropriate risk, statistically unsuccessful procedures, and bad eggs. It would provide a whole new incentive system which would align the interests and thus the efforts of patients, hospitals, insurers, scientists, technologists, businesspeople, investors and doctors alike.

It would also create a bouquet of different kinds of offerings, at different price points. Health care is the only industry I can think of that still follows Henry Ford's original principle: "Any customer can have a car painted any colour he wants so long as it is black." To see hints of what healthcare could be, look no further than the current world of elective/cosmetic treatments. It should be no mystery why medical tourism is referred to as a "nip-n-tuck tour." That whole industry is built on treatments people want which are not covered by insurance (and on wealthy citizens of countries with sub-standard levels of care). Suddenly, incentives are aligned. Choice and price exist ... and, unsurprisingly, so does a diversity of offerings. The differences are shocking.

Empower the patient, and they'll always opt for the Cadillac treatment, many say. You need faceless insurers and that group of wise men in DC to tell people "no." Hopefully by now, my rebuttal of that is predictable.

  • First, if the whole industry stepped into the 21st century and was forced to improve on all fronts, the overall average cost-per-level-of-service would come down, just like Wall Street brokerage fees after deregulation broke apart that cartel. To use Dubya's words, it would make the whole pie higher (we knew what he meant).
  • Second, if care was properly priced, and if people could choose their level of care (and assoicated price), the whole industry would look a lot different. For proof, look out on the streets today: hundreds of different cars exist with different levels of performance, comfort, and safety, all zipping around together on the freeways.
  • Third, again if pricing and choice were introduced, many people would find out that they pay for a Cadillac today, but only get an old Chevy. These folks could pay less, and keep the exact same level of treatment.
  • Fourth, yes, people who choose cheap-o policies need to be told "no" when they ask for Cadillac service. Canada or Brittain, for all their warts, at least address this point well. You should be courteously re-routed to the appropriate level of care. You don't use an elephant gun to kill an ant. You don't need an ER full of trauma docs and machines that go bing to fix a rash or when your kid swallows a coin. Wait 'till the morning and go see a nursing clinic.
  • And finally, having set aside the impact of those first 4 points, we get down to some residual "tough nuts" to crack. Recently, we've all had our eyes opened to just how bad humanity is at making choices at the margin. We always assume that the unthinkable won't happen to us. Remember, more than half of bankruptcies are triggered by exorbitant, unexpected medical expenses. Avoiding this very difficult, expensive (to the overall economy), and destructive route would give the economy a measurable boost. As a society, it needs to be viewed as foolish and unacceptable to go around without at least a modicum of catastrophic-only insurance. I'd welcome thoughts on how to get there. Like Obama, I'm willing to consider all ideas. I even think we could make it financially viable to socialize this level of care without breaking the system or Uncle Sam's budget. I also think that private solutions could be had.

My blog entry last year highlighted 7 major issues with our healthcare system. To summarize:

  1. Risk-aversion: FDA approval is painfully slow and bureaucratic. Healthcare providers choose the safe treatment to avoid being sued.
  2. Litigation: lawyers keep us all honest, but ambulance-chasing and malpractice insurance have run amok
  3. Stone-age Science: how is it that we STILL have no cure for the common cold, the most frequent killer (heart disease), or the most common ailment (back problems)? Medicine should be a science, not a craft.
  4. Stone-age Technology: Hand-written paper files and prescriptions? Seriously? Find me a successful banker, journalist, engineer, marketer, accountant, grocer, soccer mom, or even a McDonalds worker who hasn't deeply integrated the power of computers and the interwebz into their lives.
  5. Ambiguous Economics: the economics of choice and price are largely absent ... and predictable, unfortunate consequences have ensued.
  6. Reactiveness: As Obama pointed out in this week's press conference, prevention is worth a pound of cure. So pay for it!
  7. Mutated Morality: OK, so here goes. The sticky wicket of healthcare. Nobody likes to admit two things: some people are too sick to live ... and the Bible was not meant to be interpreted literally in the realm of healthcare. Get used to it. Death is a part of life. (Allow me to duck now.)

The "better" plan addresses these things, and more. Through the principle of putting patients in the driver's seat, it:

  • Prevents maladies (and thus lowers long-term cost) by focusing on "wellcare"
  • Abandons all the hype, BS, bureaucracy, and litigiousness in favor of careful cost management and a focus on customer service a'la the HelloHealth clinic in Brooklyn
  • Requires an objectivity about determining what works and and what's most efficient. Then, ensures those things are deployed wide and quick (and that old, inefficient, or ineffective things disappear right quick).
    • Frank Lichetenberg's recent study shows us the way. It should be mandatory reading on this topic.
  • Encourages the creative destruction of new technologies and procedures. (Again, see Lichtenberg for some interesting figures.)
  • Studies the system with the rigor of a physicist, and rebuilds the system with the structure of a systems engineer. (idea courtesy of Dennis Cortese, former Mayo Clinic CEO).
  • Ensures that the consumer is fully informed by aggregating all his medical records, test results, history, etc in a single place. Sorry, privacy nuts: this is one area where a trade-off is required to gain improvements in care

Principles are nice, but concrete, actionable ideas are better. Don't worry, I have those too. Too much for one blog, but stay tuned. I'll be back in a few days with some very detailed conversation-starters!

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