How much more time will it take before we realize that our economy is being aimed into a brick wall by this nation’s fee-for-service health care system? Plain and simple, the free-for-all must stop!

In the illustration below, compare what has happened over a period of 50 years, examining the composition of payers of health care. 

Observe in the above comparison how much of our health care economy has shifted to insured and government paid programs (Medicare/Medicaid).

In the next graph, we show total spending on health care in the United States, including both private and public spending, increasing from 4.7 percent of GDP in 1960 to 14.9 percent in 2005.

Spending on Health Care as a Percentage of Gross Domestic Product,
1960 to 2005

 (Percent)

Source: Congressional Budget Office based on data on spending on health services and supplies, as defined in the national health expenditure accounts, maintained by the Centers for Medicare and Medicaid Services. Note: Amounts for Medicare are gross federal spending on the program. Amounts for Medicaid include spending by the federal government and the states.

Current Estimates put U.S. health care spending at approximately 16% of GDP,  second highest to East Timor among all UN member nations. The Health and Human Services Department expects that the health share of GDP will continue its historical upward trend, reaching 19.5% of GDP by 2017.

Projected Spending on Health Care as a Percentage of Gross Domestic Product

(Percent)

Source: Congressional Budget Office. Note: Amounts for Medicare are net of beneficiaries’ premiums. Amounts for Medicaid are federal spending only.

Although the rate of cost growth slows over the projection period, the annual increase in the level would remain high. For example, for the five years beginning in 2007, CBO projects health care spending, measured as a share of GDP, to grow by 12 percent—from 15.5 percent of GDP to 17.4 percent. From 2070 to 2075, CBO projects, it will grow by only 4 percent, from 44.4 percent of GDP to 46.2 percent. From one perspective, the growth during the latter period is much slower. But in both periods, health care spending rises by about 2 percent of GDP.

Spending on Medicare and Medicaid is projected to grow as a share of total spending on health care – as the assumed rates of excess cost growth for those programs under current federal law slow less quickly than does the rate for other spending on health care and as the population ages. Net federal spending on those programs now accounts for about 4 percent of GDP, or 26 percent of total spending on health care. By 2035, those figures grow to 9 percent of GDP, or 30 percent of total spending on health care, and by 2082, to 19 percent of GDP, or 38 percent of total spending.

The carnage we are experiencing stems from our complete inability to realize that fee-for-services must stop. We must become more like the Mayo, Kaiser, Geisinger models – physicians employed and absent the lure of doing more to make more. As long as the lure, ease and the opportunities to over-diagnose, over-test, over-treat, over-procedure, over-refer and over-prescribe remain unchecked, the gasoline can sits next to the open flame.

What can we look to as prime reasons for unchecked ologist influence and ologist causes for our wanton fee-for-service spending?

For one, The Relative Value Scale Update Committee (RUC) debacle continues to poison the well as the RUC’s influence on the $2.7 trillion health care economy remains sweeping. Because the RUC is not formally a federal advisory committee (FAC), it has been challenged as being a “de facto” FAC, a designation that has legal precedent.

Our one hope for fixing the payment fairness and equity in our system is being shouted down by a clandestine voting bloc of individuals who hold a rubber stamp to empower spending more on ologist care, while offering scant incentives for the survival of the physician population (primary care doctors) best suited to sit at the wheel of the health care bus. Because only 2 of the 29 physicians on this (possibly illegal) ad hoc committee are primary care doctors, 27 other specialties get to play keep away from doctors who should stand at the front lines.

Despite its enormous influence over Medicare and commercial health expenditures, the RUC proceedings are opaque. Its meetings are closed to the public – participation requires an invitation from the Chair – and transcripts are not publicly available. Members vote secretly by electronic ballot, and the AMA discards records of the votes.

Still, CMS has accepted more than 90 percent of the RUC’s 7,000 recommendations since 1991, often without further due diligence.

The RUC is also rife with conflict. Until 2009 the AMA would not reveal the RUC members’ names. While primary care physicians represent some 55% of all doctors, 27 of the RUC’s 29 members are specialists effectively lobbying their specialist societies’ interests. Roy Poses MD, who studies financial conflicts in medicine, recently wrote,“14 of 29 members of the RUC have financial relationships with pharmaceutical companies, biotechnology companies, device companies, companies that directly provide health care, and health care insurance companies.” None of these are publicly disclosed as a condition of RUC membership. Nor is there any publicly available record of whether real or potential conflicts of interest have caused RUC members to recuse themselves from votes.

This needs to change, and primary care must get many more seats at the table. Then and only then, coupled with focused initiatives on the part of the sleeping giant that can be a game-changer (employers), can we hope to bring rampant costs under control.

Let’s also quit using Canada and the British system as whipping boys whenever there are serious talks about accessibility improvements. Remember this. Whatever we don’t attend to in a free and open system that utilizes common sense in managing spending the right way, will come back to us in the form of higher uses in the sectors of health care that cost a great deal.

The time for top-down management has come. Can we do it?

When DocOnomics readers receive notice of this new blog, it’s actually a revision of the one most recently sent.

The serenity prayer:

God, grant me the serenity to accept the things I cannot change,
Courage to change the things I can,
And wisdom to know the difference.

When it comes to health care, in its continuously aggravating, self-interested and ceaseless rush for profits and positioning, I thought hard about the serenity part.

After a day of leading my volunteer team at our church’s food pantry, and observing the medical need of fellow humans who don’t have the same privileges and access to care as more fortunate individuals, it is not that easy to feel good about our system of health care. I ask myself, “should I or anyone simply accept the way things are, or should relentless efforts be expended to address the unfortunate realities spawned by waste, inefficiency and poor quality in our health care system?” Can we remain serene about the product of our ignorance, indifference and apathy – baggage shared by physicians, hospitals, insurance companies, drug manufacturers, the government and consumers? Will we make any progress towards more accessible, more cost-effective delivery of health care if each player stubbornly adheres to its own agenda to achieve their own  results driven amid other disparate, disconnected agendas?

It is not easy to remain serene amid constant reports about physicians who practice their medicine excessively, by doing too much diagnosing, too many surgeries, too many other invasive procedures and treatments and too much prescribing. Certainly, we can’t escape the facts that in a fee-for-service free-for-all, such excesses generate substantial revenues for physicians, with frequently questionable benefits. Yet these accumulated excesses are driving our nation into a fiscal brick wall. Unfortunately, there are legions of physicians who shy away from vigorous protests and exposes about the spendthrift ways medicine is being conducted. Those physicians can make their voices heard, demanding better delivery environments, better recognition of the vital roles that cognitive medicine can play in positive reforms. They can do this if we genuinely aim to fix two major problems. First, we don’t pay our cognitive physicians fairly for the breadth of care entrusted to them. Second, we don’t afford them the time to practice effective primary care. We must fix that, and we cannot afford to dawdle in our pursuit of those objectives.

We can do better if our hospitals and hospital systems truly pursue accountability and elimination of care that is costly. That is a tall order in today’s competitive hospital environments, I know. Right now, we have to intelligently evaluate the motives behind current conceptual designs (e.g., ACOs), preventing them from becoming nothing more than methods to control their turf and drive a great deal of business into their facilities. Continuing or increasing market shares in services that are unnecessary or wasteful will not cure our cost problems.

For the good of our citizens’ health and for the good of our nation’s economy, we must strive to arrive at an answer and a solution for physicians and hospitals that overcome a perverse treatise, i.e., that physicians and hospitals take big pay cuts without opportunities to prosper in systems which deliver quality, cost-effective care.

Insurance companies and drug manufacturers are driven by profits and  stockholders, which are viable business objectives. We can’t lose sight of the vital work they perform. Insurance companies must be accountable to us in the forms of services which allow to know where our dollars are being spent. Today, there are third-party administrators who can provide state-of-the-art reporting and management platforms at highly competitive costs. What we must remain vigilant about is the potential for monopolies by the big insurers, whose numbers have dwindled down to the major players we all recognize. Drug manufacturers must produce pharmaceuticals we can afford, lest we continue to worry about people being forced to make difficult spending choices (food, heat and medicines). We are under far too much incessant influence in favor of high cost medicines, and we must curtail the use of fear factors aimed at the general, uninformed population. And too often, we hear and read about the undue influences brought about by incentivized alliances between drug manufacturers, physicians and centers of learning. Those must be reigned in.

Employers, perhaps the last bastion of hope for change, are presented with indisputable proof that they hold the keys to changes – beneficial changes which can be brought about through effective management platforms, such as on-site medical clinics and outlier case management. Unfortunately, it’s common to find that employers are too taken up with “process” and “inertia” that prevents them from making a big difference. There are some shining light examples at work in the ranks of corporations and municipalities. We can hope that more will take notice.

There is a great challenge before us when consumers are driven by having what they want in their health care, how they want it and when they want it, without being concerned about the consequences of a devil-may-care attitude about the truth – that someone always pays for waste and excess? Accountability must also apply to consumers, e.g., in the form of financial risks/rewards applied to those who, through lifestyles, constitute the greater at-risk populations that cost enormous amounts of money.

Readers, it is extremely hard to remain serene amid complacency, when facts  tell us that the light at the end of the tunnel is the headlight of the dreaded onrushing train of our financial ruin because we’re too busy with the business of here and now – money now, profit now, power now?

Courage and perseverance will be required to get the attention of those who can make a difference. The people I am privileged to know and learn from have the courage and ability to continuously campaign against the dark side forces that are driving us toward a healthcare and financial Armageddon. Yours truly does not profess to be a bastion of courage – lobbying against the existing system has its costs. What I have tried to impart to many is that I’ve become an advocate for the sustainability of a viable healthcare system. If we go broke as a result of our excesses and wastefulness and continue to rob our future generations of the wherewithal to afford decent healthcare, then complacency, short-sightedness and indifference will be the hallmarks of our current generations’  failed attempts to reign in a healthcare system which has been labeled “public enemy # 1” in our economy.

In the serenity prayer, the hard part is seeking the wisdom to know the difference. It can make one feel like a split personality. 

Over the past several days, I’ve had the pleasure and privilege of exchanging ideas with some people who I think are at the top of their games when it comes to recognizing the need to fix our health care system – and how to do it.

• Jim Ballew, CEO of Covenant Administrators, which has formulated an approach to managing health care costs by focusing not just on paying claims, but by being a risk manager. His perspectives on the critical need for data to empower claim discoveries and decisions are spot on.
• Shannon Brownlee, the author of the best seller Overtreated and a nationally known writer and essayist on the consequences of our medical excesses, avoidable health care, the patchy quality of medical evidence, and the implications for health care policy.
• Tom Emerick, for 17 years the VP of Global Benefit Design at Walmart, a speaker on contemporary benefit plan directions and a noted authority and advisor on how to effectively manage the small population (5%) of claims that eat up 50-80% of our benefit dollars;
• Rosemary Gibson, co-author of two exceptional books The Treatment Trap and Wall of Silence and a national speaker on reformation of health care. Her main theme is that we are causing a great deal of harm and suffering by way of a system that does too much unnecessary medical treatment.
• Brian Klepper, PhD, health policy analyst and activist for the restoration of primary care as the cognitive core management platform in employer health plans. His company WeCare, has achieved exceptional results through primary care managed plans and on-site clinics which lower health care costs by reducing/eliminating unnecessary and excessive testing and treatment.
• Richard Young, MD, family physician, family medicine activist, family medicine educator, and author of the soon-to-be-released book American HealthScare. Dr Young has been a consistent burr under the saddle blanket of the government industrial medical complex (GIMeC), in his views on “ologist” excesses and other areas where we are needlessly spending/wasting our dwindling resources with little positive efficacy, and how family medicine, with long overdue recognition and concessions, can provide  incredible solutions.

In our rounds of discussions (about abolition of fee-for-service medicine), the consistent themes eventually identify and point to the massive need for our delivery system to be made accountable and held to accountability standards. And “accountable” does not mean “accountable care organizations” which are intended to be nothing more than feeding tubes into the stomachs of hospital systems. That is something this writer has been harping on in writings and discussions with health care plan sponsors.

We can neither justify nor should we tolerate the fee-for-services hydra which continues to spawn excessive testing, diagnosing, treating and prescribing, of which such vast amounts contribute to our huge medical-economic waste, saps our economy and in many instances causes needless harm.

Our accountability mandate should weed out the practices which game our payment system. As Tom Emerick pointed out to me, there are family practice doctors who have set up shop in given areas (unfortunately, many of these individuals lack the same moral/ethical compass of U.S. trained physicians), and are finding ways to bill excessively for unwarranted diagnoses and treatments, and even double dipping health care plans, Medicare and Workers Comp. These are not inconsequential sums folks.

Note: It was very interesting to hear Tom Emerick’s views on the VA system, which he feels is one of our best if not the best overall health care systems in the U.S. I have long felt that way because of the primary care-based management platform and the VA’s highly effective VistA EHR.

As disclosed by a Maryland investigation, hundreds of stents were inserted by cardiologists into patients with negligible heart disease. Rosemary Gibson wrote to me about a claim for an overnight treatment that was billed at $240,000 – which Tom Emerick suggested was typical of hospital gaming of the payment system.

The bottom line to this stimulating array of thoughts is this: we need much better  evaluators of what is reasonably expected to be efficacious, where benefit dollars are leaking into a system fraught with money-making intentions, and which players are making lots of money by over-testing, over-diagnosing, over-treating and over-prescribing. Benefit plans should then be empowered to evict such providers (e.g., physicians) off of the rosters of providers, i.e., such providers should have patients taken away (Tom Emerick).

The road to salvation of our health care system will take us right through the intersection of Communication Street and Accountability Avenue. America’s employers can lead the way if they simply move the center of effective decision making from Human Resources departments to their Risk Managers. Numbers tell a powerful story that risk managers can read.

Today is a good day for banging my head against the wall, because I’ve occasioned myself to talk with some really intelligent people this week. It gives me a crystal vision of what could happen with our health care system if we really tried.

I’m not some genius with magnificent insights into the crumbling mess we call our health care system. Hardly. I’ve just been around watching it from the inside for the last 35 years and I have gotten a view of things from 10,000 feet up. It’s pretty ugly because we’ve gotten the greed, turf wars, special interests things down real good. People have sold out – and yes, many doctors are right there at the top of the list of people who have sold out to the almighty dollar. Along with the hospitals which are trying to control the turf in their areas, big drug companies trying to keep up obscene profits with their brand name money-makers (some which don’t work) and insurance companies who put stockholders first, they have sold out to a system which generates enough wasted money to float the economies of other industrialized nations.

The numbers on waste are huge – terrifying actually, because they measure not only the crippling effect on our nation’s economy (David Walker called health care Public Enemy #1), but they are also measurable in terms of the needless financial and physical suffering that is being caused.

Why have we read and why are we continuing to read stories like Maryland’s expose of hundreds of unjustified stents being placed in patients who had little or no heart disease, or the Redding Tenet Hospitals a few years back that did scores of unwarranted cardiac surgeries, or about drugs with no efficacy – yet supported by “bought” physicians, and spine patients having completely unwarranted procedures and lives of pain? The list goes on and on.

I had the delightful occasion to communicate and speak with Rosemary Gibson this week. She and economist Janardan Prasad Singh have written a couple of terrific books. The Treatment Trap is about the overuse and abuse of all kinds of medical care and how it can wreck lives – from the perspective of how people have been hurt by unnecessary medical everything. Real stories. Wall of Silence  is about cover-ups of medical errors, the truths about the conspiracy to hush up the terrible hurts and harms that happen when medicine screws up. You can also follow their blog at Treatment Trap.

Rosemary Gibson is a leader in health care innovation, making cutting-edge improvements in the care of patients and their families for more than twenty years. Gibson’s work has included implementing training programs for physicians at 800 hospitals, including Memorial Sloan-Kettering Cancer Center and Mount Sinai Medical Center in New York. Gibson also initiated new standards for the treatment of patients in pain with HIV/AIDS and breast cancer. These standards are now in effect at 18,000 health care facilities nationwide. She also worked with Bill Moyers and Public Affairs Television to develop the PBS documentary, On Our Own Terms, which had more than 20 million viewers.

Gibson was formerly the Vice President of the Economic and Social Research Institute and served as Senior Research Associate at the American Enterprise Institute. Gibson has been a consultant to the Medical College of Virginia and the Virginia State Legislature’s Commission on Health Care.

Gibson holds a Bachelor’s degree from Georgetown University and received her Master’s degree from the London School of Economics. Her articles have appeared in several publications, including The Wall Street Journal and the Journal of the Royal Society of Medicine.

If I were king of the United States, I would issue an edict on health care. That edict would be that no one would receive any health care benefits of any kind, and no employer would be allowed to derive any business benefits (like tax deductions) unless they attended courses and/or read the books by a distinguished group of teachers:

• Rosemary Gibson & JP Singh – a course based on The Treatment Trap and Wall of Silence – on how unjustified overuse and greed lead to patient harm and suffering;
• Shannon Brownlee – author of Overtreated, how overuse, overtreatment, etc are hammering our economy;
• Clayton Christensen’s course and book The Innovator’s Prescription – a Harvard business educator’s call to disruptive thinking;
• Richard Young, MD’s book American Health Scare (soon to be published) – a family physician-educator jabs an educated finger into the eye of the GIMeC – the government industrial medical complex;
• Brian Klepper, PhD – author of the Care and Cost blog commentary and an outspoken advocate for primary care medicine and business innovation to create a proven management platform for employer health care plans;
• Tom Emerick, former VP of Walmart’s Global Benefit Design and cutting edge advocate for exceptional programs to manage the massive costs of tertiary and quaternary care generated by a minority of the health care population, through centers of excellence;
• Jim Ballew of Covenant Administrators, who has the guts to tell employers and employees about the administration of health care with the fatted insurance companies, and how programs that require employees to put their skin into the game produces improved health and cost savings;
• A small, select group of practicing family practice physicians who will tell about the challenges of delivering the kind of health care we want and need, based on doctor-patient bonding.

Little chance about me ever becoming king, but I’ve fantasized about this group of innovators forming a national strike force to make positive changes happen. If that should ever come to pass – watch out!

In today’s Dallas Morning News, Business columnist Jim Landers writes that the latest health care spending data shows that consumers nationwide are bearing more of the cost, with millions losing their insurance and those still insured paying higher premiums and spending more out of pocket. For many employers, controlling costs still are reliant upon shifting more pain onto employees.

As a result, spending went up less than usual in 2010. Average spending was $8,402 per person, an increase of 3.9 percent, which actuaries for the federal Centers for Medicare and Medicaid Services, or CMS, called “extraordinarily slow growth in the use and intensity of services.” FYI, we still spent $2.6 trillion, and if the independent studies by the Institute of Medicine and Price WaterHouseCoopers remain valid for 2010, then one-third to one-half of our budget went down the garbage disposal – waste and overutilization.

In a separate video, Susan Dentzer, editor of Health Affairs appears on PBS to describe the circumstances as well. Watch that video clip here. Health Affairs on PBS

The recession, however, caused a sharp increase in unemployment, and millions of Americans were parted from their health insurance safety nets. The insured population dropped by 5.7 million in 2009 and an additional 3.7 million in 2010. As a share of the economy, health spending stabilized in 2010 at 17.9 percent of gross domestic product after experiencing the biggest jump on record for 2008.

For the poorest Americans, Medicaid spending went up by 7.2 percent in 2010

Out-of-pocket spending for physicians and clinics in 2010 increased 3.2 percent, but dropped 4.1 percent for prescription drugs. Health insurance premiums went up 4.4 percent per enrollee.

Len Nichols, a health care economist and head of the Center for Health Policy Research and Ethics at George Mason University in Virginia, said consumers using less health care could be “a time bomb in the system.”

“You will go when it’s life-threatening,” he said. “But the insidious part of being uninsured is what happens when you’re not taking care of yourself.”

Nichols said a slowdown in prescription drug spending — up just 1.2 percent in 2010, the smallest rise on record — suggests patients with chronic conditions such as hypertension and diabetes were curbing medication to save money.

“That’s the kind of use we do not need to cut,” he said.

The bottom line in this quandary is the time bomb. Tom Emerick, who for 18 years was  VP of Global Benefits at Walmart and is now an independent national consultant, has opened this writer’s eyes about the problems we face when a small percentage of our healthcare consumer population gobbles up 75-80% of our healthcare resources. These are the healthcare consumers who must get tertiary or quaternary care – highly specialized and for very serious problems, e.g., transplants, heart surgeries and other super-sophisticated care that cost megabucks. Too many medical centers lay claim to the best care, yet are repeatedly shown to misdiagnose or wrongly treat patients.

Why would one predict we’ll see more of those megabuck users of healthcare as a result of our slowing healthcare costs? It doesn’t take rocket science to understand that diabetics who don’t follow treatment regimens, patients with high blood pressure who skimp on medicines or any number of other treatable conditions that fail to see their physicians or take their medicines are accidents waiting to happen. That’s when they become part of the tertiary or quaternary levels of health care and that’s where they create very heavy expenses.

Our healthcare dilemma looks like this:

We need to prevent people from graduating to the core group of very costly medicine consumers when possible. Skimping on basic treatments and graduating to far more serious problems  is not the way to do that. And if people do get very sick and require the most advanced and costly care, we need to ensure that they are being treated at the right places.

Otherwise we’ll pay dearly to remove that bullet from our foot.

A few years ago, I was asked to prepare a seminar for the physicians at a University of Texas Family Medicine Residency campus. This was to be a two-part seminar:

• A doctor’s practice as a business; and
• A physician’s personal wealth management

The doctor who coordinated the day’s program was an emeritus icon in East Texas. He asked me to teach two things to these new doctors about to go into the world of practice:

• Treat your practice as a business, or you’ll go out of business; and
• Don’t make your first purchase a million dollar house.

Today, a few years later, an article appeared in CNN Money about the result of what I have seen for many years – too many years. This CNN story tells about doctors going broke – flat broke.

First, there are far too many doctors out there who suffer from the spend-all-you-want syndrome – believing that the sacred cow of the American health care budget will continue to produce milk. WRONG, WRONG, WRONG! The cow is going dry and all you need to do is look at the horrific waste taking place in our system. One-third to one-half of our annual American health care bill is paid into waste, according to the Institute of Medicine and Price WaterhouseCoopers.

And yet we see Americans feeding their nickels into the slots of everything from unneeded stents to gastric sleeves (just to lose weight that a few stitches in the lips would fix) to horribly coordinated and treated diabetes care and heaven knows what else. Ridiculous and obscene. Who is in the pilot’s seat here?

The second fact is that there are many doctors out there who are total noodniks when it comes to management of their practices. I can’t begin to tell you how many times I’ve recommended to Dr. Leaky-boat that he/she hire a good practice management advisor to help fix the problems (e.g., way too long receivables).

I’ve always hovered around a few choice phrases onto which I’ve hung the problems of many physicians I’ve seen – hubris, ego, I’m- a-doctor-and-I-know-everything, I’ll just do more this and that, etc.. And the CNN story tells it like it is.

If no one has noticed, we are killing off the cure for many of our wheels-off problems. As a group, family practice docs (and to an extent other general pediatric and internal medicine docs) are the only groups I know that are getting really clobbered financially and by stress. They have to run like mad to see enough patients each day to keep their practices up and running, they are pushed to extreme limits physically, and they know that they are being forced to chop down face times with patients to keep the boat afloat.

Imagine this for a second. Imagine knowing that you as a physician are a part – a vital part – of the cure for American health care’s massive problem. Imagine further that you are being kept in a prison that prevents you from doing what we need to do. That’s exactly what is happening to our front-line primary care physicians who could do one whale of a job of re-directing our errant and rampant health care spending into more well-managed and coordinated avenues if we just paid them rightly and gave them the time to do what needs to be done. Unfortunately, we’ve starved them out largely due to other physician special interest groups that don’t want to share the wealth. What wealth?

That’s why guys like Richard Young, MD in Fort Worth are teaching smart medicine to our next generation of family docs, and writing about the nastiness of our spend-to-the-end appetites for medicine. Guys in private practice like Guy Culpper, MD get to have conversations with me after their kids are home asleep and they’re still at the office taking care of their patients’ detail (some life). Guys like Brian Klepper, PhD who are waging war against health care gluttony through writings and action strategies to show the world just what primary care medicine can do when we put the control mechanisms into the hands of the right people with the right amounts of time.

The only places we are going to fix this problem is when employers start putting in the tools to manage their health care costs – programs like primary care clinics run by primary care docs with all the time they need to deliver the highest quality medicine at prices people can afford, reduce the vile waste we are committing, and save employers enough money so they can redirect corporate dollars back into growth and hiring – and not into the maw of the health care Black Hole. $800 billion – $1.2 trillion could do a lot back in productive use, no?

We are so stupid.  Here’s the story in CNN Money.

It’s 2012. Let’s Recap

Posted 1/02/11 on Cracking Health Costs

Tom Emerick is a former VP of US Benefits for Walmart. He now consults, and writes at Cracking Health Costs.

Let’s hit a few highlights of 2011.  In Cracking Health Costs we described certain…um…scary trends in health care in the US:

• US spending on health care is lapping our peer countries while our life expectancy is declining comparatively.  This is a major drain on our economy and is costing us jobs.
• We have a huge amount of unnecessary surgery and testing.  It’s getting worse, not better.  (Read The Treatment Trap by Rosemary Gibson and Janardan Prasad Singh for real life examples.)
• In health plans today, a small number of members are spending most of the money.  I’ve seen very large plans in which 10% of members are spending 80% of plan dollars.   These “outliers” are usually in the middle of serious acute health crises and are way beyond wellness, preventive, value-based purchasing, HSA incentives, consumer driven health care, public/private partnerships, etc.  “Outliers” often need specialized tertiary or quaternary care.
• There is huge variation between tertiary and quaternary referral centers in terms of getting the diagnoses right, having the best outcomes, and saving lives.  The best referral centers are the most cost effective too.
• Most specialists in the US don’t coordinate care or diagnoses.  As a consequence, a large number of “outliers” are misdiagnosed and/or have bad treatment and surgical plans.  This is a huge opportunity for benefit plans.
• Alas. We know that true reform can never and will never come from Washington. Members of Congress will see to it that clinics and hospitals in their districts are protected.
• Health insurers understand this but are often not supported by corporate benefit executives when they delete poor performing doctors and hospitals from their networks.
• Most benefit executives are looking for the deepest discounts when selecting a network, not the lowest net cost, a big difference.  Lowest net cost comes from getting diagnoses right, avoiding bad surgery, and coordinating care.  Those traits trump deepest discount every time.  A small but growing number of large corporations are getting this one right.
• If the system is to be reformed it will be done by corporate benefit executives.  Congress can’t.  Insurers can’t.
• Most of the clinicians who over-test and do a poor job of getting diagnoses and treatment plans right aren’t going to improve until someone takes their patients away.  Period.

The question is, how to take their patients away.  There’s a way.

If you are a benefit executive:

• Ask your TPA, carrier, or PPO to start figuring out who the “A players” are and load your networks with them.  Ask them to identify the “C clinicians” and begin the process of deleting them from your network.  The savings potential from this is huge. Plus, you will be protecting your employees and improving the quality of their care.
• Educate your employees about this.
• For your outlier population, implement centers of excellence for their specialized needs.
• If your company has more than 5,000 covered lives or so, you should develop and implement direct contracts with the best of the best centers of excellence, ones like Mayo Clinic and Cleveland Clinic.  Great companies like Pepsi, Walmart, and Lowes have done just this, plus many others. You can do it too.

In this Christmas Carol adaptation, let’s give our health care system a face and name. Let’s call it Dr. Ebenezer Scrooge.

Tonight, three ghosts will visit our doctor.

The ghost of Christmas Past reminds us of a time when family doctors were able to spend quality time with their patients. For many, our family doctors were a part of the family – we knew them and they knew us head to toe. We were confident with them, we didn’t feel rushed and going to them didn’t cost an arm and a leg. Care wasn’t an ordeal.

Then changes started. We began to ”improve” health care by systemizing, categorizing and organizing it. We started “managed care” organizations. We didn’t know if we would stay with our trusted family doctors. Care was becoming more process-driven and it took more effort to get the care we needed from the system. Family doctors were increasingly deluged with paperwork and they had to fight harder and incur added expenses just to get paid. We lost our way and confidence as we were forced to navigate the mazes. And we called that “progress” as our medical spending wandered aimlessly and everyone started to help themselves to bigger, richer pieces of the health care pie. Costs started to rise at an alarming pace. A smaller number of big insurance companies got more powerful and better able to control things as their bottom lines got healthier and their stockholders got happier. Drug companies raked in their shares of the pie by coming up with scores of new patent-protected drugs. Healthcare was a cash cow for many. More gadgets appeared.

When life was simpler, we started to drift away as we started “improving” and prioritizing profits.

The ghost of Christmas Present tells us how we have embraced the age of specialization and financially motivate new physicians to become specialists. There are many more specialists than family doctors and unchecked  fee-for-service medicine reigns supreme. Because more people are fat and sedentary, we are taking more cholesterol drugs, getting stents and losing weight by having surgeries. Our lifestyles are feeding an opportunistic “medicine of more”. Doctors unnecessarily test so they won’t get sued. The pharmaceutical companies have run amuck with advertising drugs on television – “direct to consumer” marketing. Doctors are financially influenced to endorse drugs, even in the face of scientific opposition. We are over-worrying, over-diagnosing, over-treating and over-prescribing ourselves into bankruptcy.

There is a frenzy of initiatives to promote cost-effective care. Big hospital systems are conjuring up things called Accountable Care Organizations, which are little more than hospital feeder networks. The government thinks everyone should be insured, so we have this monstrous bureaucracy looming. Politicians with their armies of lobbyists and health industry special interests are incessantly squabbling.

It is reported that in our nation’s $2.5 trillion dollar annual health care bill, one-third to one half is pure, unadulterated waste.

Our medical education institutions are not training enough primary care doctors, as we look ahead to a tidal wave of Medicare enrollees. Doctors in training are being discouraged from entering into primary care, and today’s primary care physicians run on daily treadmills to maintain their practices. Some contemporary thinkers even wonder about the  importance of physical examinations by our doctors. We hear about IBM’s Watson.

The dysfunctionalities of our government and the despicable greed that has wrecked our financial institutions have motivated politicians and government agencies to come up with insidious ways to trim Medicare and Medicaid spending.

The ghost of Christmas Present tells us that if these events remain unchanged, the consequences will be dire.

Dr Scrooge begs the ghost of Christmas Future to “tell me what I must do to wipe away my name from this headstone”.

What can be done to keep our health care system from squandering dwindling resources? To whom do we turn?

What if IBM’s “Watson” becomes “Dr Watson” because we don’t have enough cognitive family doctors in a vast ocean of specialists? DO NOT SAY IT CAN’T HAPPEN! Who will give us the time necessary and dedicated to employing the most vital tools in medicine – a skilled physician’s eyes, ears and hands?

We had better make up our minds to equitably apportion the health care pie into pieces that allows us to eliminate the waste and restore primary care medicine. Do specialists want to envision waiting rooms occupied by people with multiple maladies? There is a price we’ll pay for delegating away the bedrock skillsets of interpersonal, doctor-patient encounters with physicians who know us as total persons, and not just specific problems.

We had better make our minds to equitably pay primary care doctors for the time needed to counsel and guide patients into the appropriate, prudent courses of cost effective care.

If we do not take the steps necessary to respect and reinvigorate the pursuits of primary care disciplines like family medicine, and make doctor patient time a most honored component of health care, and pay our primary care physicians fairly for doing what they do best and what we need the most, then our path of health care will continue to evolve into chaos. If hubris of doctors and medical institutions prevents them from energetically embracing the reality and value of primary care medicine …….

……. Dr Scrooge’s name will remain carved on the headstone.

This is a time of year for perspectives. Big, grand perspectives as we enter into the time of year for big-spending, big celebrating and overindulging ourselves.

But please strain your ears to hear the needs of those among us, and wonder what is really important. Then think about the landscape of our country – let’s start with health care.

Doctors who worry more about themselves and their incomes, doctors who are indifferent to the cries for substantive change, doctors who forget or can’t take time to remember who comes first, greedy and manipulative pharmaceutical companies, insurance companies that worship stockholders, politicians on the take from health lobbyists, hospitals that want to control it all, government that aims to control healthcare and drive us into the poorhouse.

There are people out there who are suffering for want of health care. When you sit in front of the fire, think about the health of people in cold states who are worried about freezing to death because they won’t be able to purchase heating oil, food and prescriptions. Children going to bed hungry. There are food pantries (like the one I work at) that are running out of food as the lines of hungry people are getting longer and larger.

Think about families where children are wanting for a “home” because parents are too busy chasing the materialistic American dream. Then ask why so many kids are on drugs, dropping out of their shares in our future and even committing suicide. Kids that are faithless because they are so disillusioned, overindulged and bored.

And then think about those in our “great society” who ponder which Lexus they’ll give as a stocking stuffer, and which destruction-celebrating video game to buy the kiddies, and which fine bottles of wine to display to impress the guests on New Year’s. And which gift in the Neiman Marcus catalogue captures their fancy. Ah, the good life.

You readers know I don’t use DocOnomics as a faith-based pulpit, although I am a Christian man of faith. But my faith embraces all faiths which share a common belief that we are brothers and sisters who may be Christian, Jew, Muslim, Buddhist – any faith as long as that faith embraces kindness, compassion, hearts for giving and caring. In all such faiths, God is present in our beliefs that we must try to treat others as we would like to be treated. Isn’t that a universal language of our global brotherhood? Do we see it clearly?

Don’t like this message? That’s fine – go ahead and delete it.

But for you physician readers, consider that the doctor with his hands folded in prayer is a doctor of all faiths and denominations who is asking the Almighty for help for this country in all of our needs. Health care is a good place to start, but there are many others.     

Wondering what you can do to improve your retirement accumulation planning? Found out the big money mutual funds in your retirement plan are raking in a lot of money on fees and expenses that reduce the value of your plan balance, no matter if you gain or lose? Want more choices?

What can you do?

In the last DocOnomics, the possibility of a non-hardship inservice withdrawal was discussed as a way to relocate retirement assets outside of a plan for better choices and lowered expenses, while an individual is still actively employed by his or her company.

In this commentary, we will look at the concept of the “brokerage window”.

Brokerage windows are options in some employer defined contribution plans (e.g., 401(k), 403(b) and 457 plans) that allow retirement savers to bypass their plans’ standard menu of investments and select virtually any stock, retail mutual fund or exchange traded fund offered by the broker administering the plan. They are also called participant-directed brokerage accounts.

While the option is hardly widespread (fewer than 1 in 10 company plans offer them now), some experts say they are gaining popularity since a 2009 federal appellate court ruling on an excessive-fee case involving Deere & Co.’s retirement plan.

Among those making the move: Sprint Nextel Corp., which began offering a brokerage option for its $2 billion 401(k) plan in October; Stanford University, whose $3.6 billion 403(b) plan’s window opened in November; Hawaii’s $1.45 billion 457 plan, which launched its self-directed brokerage operation in April; and the Ohio Public Employees Retirement System, which will offer the option in its $373 million 401(a) plan next spring.

Other plans have seen significant dollars flowing into these windows, according to BrightScope Inc., which tracks plans. Among them: Continental Airlines (35 percent of plan assets); The Permanente Medical Group Inc. (27 percent); SchwabPlan Retirement Savings (18 percent); IBM (8 percent); Northrop Grumman (8 percent); and AT&T (6 percent).

Note however that in a survey of 1,000 401(k) participants, more than 7 in 10 said they view their employer as at least somewhat responsible for their retirement financial planning. For them, a limited menu may be the best thing and offering a window doesn’t help or hurt a plan’s score. In plans that have them, no one can complain they didn’t have access to lower-cost options. On the flipside, too much choice can have a paralyzing effect on inexperienced investors.

If your own plan offers a window or moves to offer one, be aware of certain  caveats. Costs are a mixed bag and, in theory, a window could save you money. If your 401(k) offers mediocre mutual funds with high expense ratios (funds’ operational costs), you could opt out of the lineup and choose a low-cost index fund, for example.

If a brokerage window option is offered, it is recommended that the plan sponsor require a written acknowledgement from the participant that the participant:

• understands and accepts any and all risks associated with this selection;
• understands an undiversified portfolio consisting of a small number of individual securities has an unusual risk profile and increases the likelihood of a failure to meet retirement goals, relative to a comparable benchmark;
• understands and accepts that none of the investments available in the self-directed brokerage option have been reviewed for suitability by the plan sponsor;
• is solely responsible for determining the suitability or appropriateness of any selected investment; and
• agrees to hold the plan sponsor harmless against any claims, damages or other causes of actions which may arise as a result of any negative consequences resulting from use of the brokerage window option.

In addition, it recommended that the plan sponsor disclose to participants the basic fees for participating in the brokerage window and the potential for additional fees and transaction costs.

Some defined contribution plan executives may want to interject more simplicity in the core offerings of their plans, and the window has become an outlet for people who might be unhappy with the limiting changes, charges for the simplified menu of funds or who simply want more choices.

Research shows a steady rise in the use of self-directed brokerage windows. Tracking results every two years since 2001, one retirement plan benefit consultant found the percentage rose steadily from 12% in 2001 to 26% in 2009 among midsize and large companies. In 2009, the survey showed self-directed brokerage accounts represented 3% of assets in plans in which the option was available.

The primary drivers are the participants with the highest income and highest account balances and the longest tenures. People who use it are typically working with a financial adviser who may have shown better results in outside investing. A 2010 Hewitt survey that shows higher salaries were linked to higher participation in self-directed brokerage accounts. That survey showed 10.4% of participants earning more than $100,000 annually used the option in 2009, compared with 1.5% of those earning $20,000 to $39,000 a year.

Some self-directed brokerage accounts are restricted to mutual funds; others allow participants to invest in individual stocks and bonds, as well as mutual funds and exchange-traded funds. This gives sophisticated investors more options than are available in a typical plan and will satisfy investors in any plan who chafe at what they claim are limited or administratively expensive choices.

Some plans charge an annual administrative fee to window users, and users pay all transaction costs. All expenses are paid from account balances, and the transaction costs incurred by those using the brokerage window option won’t be borne by everyone else participating in the plan.