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Subject: John C. Goodman - A Prescription for American Health Care
CJH    4/25/2009 1:20:32 PM
Imprimis - A Prescription for American Health Care "Let me offer a few examples of how the free market is already working on the fringes of health care. Cosmetic surgery is a market that acts like a real market—by which I mean that it is not covered by insurance, consumers can compare prices and services, and doctors can act as entrepreneurs. As a result, over the last 15 years, the real price of cosmetic surgery has gone down while that of almost every other kind of surgery has been rising faster than the Consumer Price Index—and even though the number of people getting cosmetic surgery has increased by five- or six-fold. In Dallas there is an entrepreneurial health care provider with two million customers who pay a small fee each month for the ability to talk to a doctor on the telephone. Patients must have an electronic medical record, so that whichever doctor answers the phone can view the patient’s electronic medical record and talk to the patient. This company is growing in large part because it provides a service that the traditional health care system can’t provide. Likewise, walk-in clinics are becoming more numerous around the country. At most of these clinics a registered nurse sits in front of a computer terminal, the patient describes his symptoms, and the nurse types in the information and follows a computerized protocol. The patient’s record is electronic, the nurse can prescribe electronically, and the patient sees the price in advance. We’re also seeing the rise of concierge doctors—doctors who don’t want to deal with third-party insurers. When this idea started out in California, doctors were charging 10-15 thousand dollars per year. But the free market has worked and the price has come down radically. In Dallas, concierge doctors charge only $40 per employee per month. In return, the patient receives access to the doctor by phone and e-mail, and the doctor keeps electronic medical records, competes for business based on lowering time costs as well as money costs, and is willing to help with patient education. Finally, consider the international market for what has become known as medical tourism. Hospitals in India, Singapore and Thailand are competing worldwide for patients. Of course, no one is going to get on a plane without some assurances of low cost and high quality—which means that, in order to attract patients, these hospitals have to publicize their error rates, their mortality rates for certain kinds of surgery, their infection rates, and so on. Their doctors are all board-certified in the United States, and they compete for patients in the same way producers and suppliers compete for clients in any other market. Most of their patients come from Europe, but the long-term threat to the American hospital system can’t be denied. Leaving the country means leaving bureaucratic red tape behind and dealing instead with entrepreneurs who provide high-quality, low-cost medicine."
 
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Aussiegunneragain       4/25/2009 8:30:58 PM
In Dallas there is an entrepreneurial health care provider with two million customers who pay a small fee each month for the ability to talk to a doctor on the telephone. Patients must have an electronic medical record, so that whichever doctor answers the phone can view the patient?s electronic medical record and talk to the patient. This company is growing in large part because it provides a service that the traditional health care system can?t provide. Likewise, walk-in clinics are becoming more numerous around the country. At most of these clinics a registered nurse sits in front of a computer terminal, the patient describes his symptoms, and the nurse types in the information and follows a computerized protocol. The patient?s record is electronic, the nurse can prescribe electronically, and the patient sees the price in advance.
As an ex-RN at face value I find this a bit terrifying, though I'd like to know more about the service before I make a final judgment. For most conditions nothing replaces a physical examination by a physician or appropriately qualified nurse practitioner when prescribing medical care and not just at the initial consultation.
 
Also given the complexity of medical science, I question the ability of most people to make an informed risk analysis when deciding whether or not to purchase a medical service based on price. All that is likely to happen is that the person will skimp on a treatment, only to get much sicker and end up in hospital down the track at a much greater cost. This is bourn out in the US with many with chronic diseases being unable to pay for treatment, only to end up in hospital where they legally can't be turned away if they don't have insurance and where the Federal Government ends up picking up the bill. It would be more efficient to socialise primary medicine to maximise the chance of preventing them from getting acutely ill in the first place, but to maintain a privatised secondary and tertiary medicine sector with provision to automatically take repayment for services rendered through the taxation system.
 
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CJH       4/25/2009 9:47:51 PM

In Dallas there is an entrepreneurial health care provider with two million customers who pay a small fee each month for the ability to talk to a doctor on the telephone. Patients must have an electronic medical record, so that whichever doctor answers the phone can view the patient?s electronic medical record and talk to the patient. This company is growing in large part because it provides a service that the traditional health care system can?t provide. Likewise, walk-in clinics are becoming more numerous around the country. At most of these clinics a registered nurse sits in front of a computer terminal, the patient describes his symptoms, and the nurse types in the information and follows a computerized protocol. The patient?s record is electronic, the nurse can prescribe electronically, and the patient sees the price in advance.


As an ex-RN at face value I find this a bit terrifying, though I'd like to know more about the service before I make a final judgment. For most conditions nothing replaces a physical examination by a physician or appropriately qualified nurse practitioner when prescribing medical care and not just at the initial consultation.

 

Also given the complexity of medical science, I question the ability of most people to make an informed risk analysis when deciding whether or not to purchase a medical service based on price. All that is likely to happen is that the person will skimp on a treatment, only to get much sicker and end up in hospital down the track at a much greater cost. This is bourn out in the US with many with chronic diseases being unable to pay for treatment, only to end up in hospital where they legally can't be turned away if they don't have insurance and where the Federal Government ends up picking up the bill. It would be more efficient to socialise primary medicine to maximise the chance of preventing them from getting acutely ill in the first place, but to maintain a privatised secondary and tertiary medicine sector with provision to automatically take repayment for services rendered through the taxation system.


 
I don't know about this example but I cannot imagine, given the need for defensive medicine, any service doing what you argue they ought not to do here. The service could become lawyer bait if it handed out precriptions without benefit of having the results of an exam.
 
I agree about going purely by price when shopping for healthcare. It should be the best service at the lowest cost.
 
About being under treated, that sounds a lot like what I've heard about HMOs. That's why I wouldn't have one.
 
But I think what the author is trying to show is that government involvement in healthcare is preventing quality improvements which would be possible in a free market context and which would result in better treatment at less cost (hence the above cosmetic surgery example). That, after all, what total quality management is all about I believe.
 
And a discussion about government and avoiding unnecessary healthcare costs gets close to a pet peave I have. We have to wear seat belts by law because insurance companies argued that the costs of injuries of non-wearers are shared by everyone. Well if that's true, then we need to outlaw homosexuality on the same basis. Homosexuality is self destructive and therefore results in unnecessary healthcare costs which are inflicted not just on other homosexuals but on everyone. Talk about inconsistency!

 
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Aussiegunneragain       4/26/2009 2:30:53 AM
But I think what the author is trying to show is that government involvement in healthcare is preventing quality improvements which would be possible in a free market context and which would result in better treatment at less cost (hence the above cosmetic surgery example). That, after all, what total quality management is all about I believe.
 
From what I have read and studied on health economics (which is reasonably extensive) no doubt that the free market leads to a greater degree of innovation than socialised medicine, which is why so much innovation in healthcare comes out of the US. Whether it will generally do so at a lower cost is another matter. The healthcare market it riddled with market failures such as principal/agent problems (such as defensive medicine which you mention) and monopolistic behaviour by providers. These cost pressures are reflected by the much higher percent of GDP that the US spends on healthcare than places with socialised medicine and that reflects a lot of inefficiency due to market failures rather than just reflecting demand.
The other problem with an entirely free market in healthcare is that a signficant proportion of people can't afford the care that they need. We can legitimately debate whether or not that is everybody elses problem, but the reality is that those people vote (as do those who believe there is a moral obligation to ensure everybody can get healthcare. Therefore they will always be able to insist that the Government provide them with a degree of assurance that they will be treated when they need to be. They do that already in the US and your Government's spend about the same percent of GDP on healthcare as Australia and the UK but private citizens or their employers have to spend much more over and above that in order to have decent healthcare. For all that you still get worse health outcomes than other developed nations. My theory is that you guys spend to much time arguing about whether or not governments should be involved in healthcare, when you should really just accept that the political reality that they will be and get on with making the government funded proportion of the system working as well as it can. I believe that by focussing government spending on primary healthcare you should be able to do this, while maintaining the high degree of quality and innovation that comes out of a predominantly private secondary and tertiary sector.
 
And a discussion about government and avoiding unnecessary healthcare costs gets close to a pet peave I have. We have to wear seat belts by law because insurance companies argued that the costs of injuries of non-wearers are shared by everyone. Well if that's true, then we need to outlaw homosexuality on the same basis. Homosexuality is self destructive and therefore results in unnecessary healthcare costs which are inflicted not just on other homosexuals but on everyone. Talk about inconsistency!
 
I agree on the seatbelt issue. As far as I am concerned if an adult doesn't wear a seatbelt an they are injured or killed then that is their problem. The insurance companies should just make it clear that they won't be covering non-wearers and let people make their own decision.
 
However, without wanting to get into a long debate about the morality of homosexuality I would point out that it is unprotected sex by promiscous homosexuals that is a health risk (as is unprotected sex by promiscous heterosexuals). Not all homosexuals act in that way and you therefore can't characterise homosexuality as self destructive on that basis. I also think you would have a hard time banning promiscurity by heterosexuals or homosexuals unless you like the idea of running your country like Iran.


 
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CJH    Peave   4/26/2009 4:20:04 PM
Actually, the purpose of the "pet peave" was to illustrate how government policy can be irrational rather than to express a desire to moralize over homosexuality.
Of course, that being said, I believe that homosexuality is self destructive based on what I hear about their health and longevity statistics.
 
It is one thing to grandstand moralistically but it is another to be honestly concerned for practical well being.
 
Of course I realize that promiscuity per se is the problem but from what I hear, homosexuals are pretty promiscuous.
 
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CJH    DRGS   4/26/2009 4:32:22 PM
My wife is an RN and she keeps telling me that the government and the insurance companies have been in medicine since the eighties. She says there are DRGs or drug related groups which are medical and surgical conditions which indicate a definite number of  hospitalization days that insurance or government will pay for.
 
We've had Medicare and Medicaid for a while and she says the government is more of a stickler about this than insurance.
 
So doctors have had to work around the restrictions imposed by government and private insurance. For instance, Medicare will only pay so much for a certain treatment which ties the hands of healthcare provider.
 
So the point is that our healthcare industry has already been under coersion or duress for some time. The frustration for doctors is that insurers or government want to "practice medicine" so to speak.
 
It is this current arrangement which is part of the problem I gather.
 
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CJH    Health Outcomes   4/26/2009 4:48:48 PM
I suspect that healthcare outcomes are the result of lifestyle choices to a great extent.
 
You can't eat at any but the more trendly eateries here without running the risk of getting a whole lot of fat. 
 
We have in this country large groups of people who value the pleasure of eating or drinking more than their health.
 
I believe there are a lot of people who don't get screened early for problems. A lot won't see a doctor until they are in a bad way then they'll go.
 
So behavior or lifestyle choices are a large part of the outcomes problem. It's a matter of culture and education I guess.
 
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Aussiegunneragain       4/26/2009 8:57:55 PM

My wife is an RN and she keeps telling me that the government and the insurance companies have been in medicine since the eighties. She says there are DRGs or drug related groups which are medical and surgical conditions which indicate a definite number of  hospitalization days that insurance or government will pay for.

 We've had Medicare and Medicaid for a while and she says the government is more of a stickler about this than insurance.

 So doctors have had to work around the restrictions imposed by government and private insurance. For instance, Medicare will only pay so much for a certain treatment which ties the hands of healthcare provider.

 So the point is that our healthcare industry has already been under coersion or duress for some time. The frustration for doctors is that insurers or government want to "practice medicine" so to speak.

 It is this current arrangement which is part of the problem I gather.


DRG stands for Diagnosis Related Group, not Drug Related Group. They were developed in the 80's for US Medicare and have also been applied by insurance companies as a way of applying a measurable standard to the amount of treatment that people need for a given condition. When they are directly linked to funding on a patient by patient basis the resulting system is known as a prospective payment system. This was developed to play a part in managed care systems that attempt to control healthcare costs which are spiralling, mainly due to the development of new technology.
 
I don't know if prospective payment systems are the best way to control costs (healthcare staff certainly hate it) and there are other methods that can be used (but these tend to lean more towards socialisation and rationing). However I do think that the need for healthcare funders to control costs is just a reality. Healthcare staff will always err on the side of caution when it comes to treating people by keeping people longer in hospital than they need to and always want to make use of the very best and latest technology. This is all very well but no health funding system can cope with all those demands so some sort of control needs to be put in place. In addition the absolute health benefit of newer technology over the old is often marginal.
 
I note that this is a challenge even in a privatised system because the price expectations of health insurance customers are unrealistic compared to the expectations that they have of what treatment that they will recieve from the insurance company. Personally I just wish that people would learn to be realistic in their expecations but they won't so there needs to be discipline imposed one way or another.
 
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Aussiegunneragain       4/26/2009 9:00:24 PM

I suspect that healthcare outcomes are the result of lifestyle choices to a great extent.
 
You can't eat at any but the more trendly eateries here without running the risk of getting a whole lot of fat. 

 We have in this country large groups of people who value the pleasure of eating or drinking more than their health.

 I believe there are a lot of people who don't get screened early for problems. A lot won't see a doctor until they are in a bad way then they'll go.

 So behavior or lifestyle choices are a large part of the outcomes problem. It's a matter of culture and education I guess.

Granted lifestyle choices matter a lot. However, if you are spending 50% more on healthcare than comparable countries without at least doing a bit better in health outcomes you surely would start to question whether you are getting a decent bang for your buck out of your system.

 
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sentinel28a       4/27/2009 3:42:32 PM
Reforming health care in the US is easy.  Get the gorram lawyers and business admins out of it.
 
Too many of our hospitals (including my local one) are run by CEOs.  They don't give a damn about health care.  All they care about is the bottom line.  Case in point: I had to have some minor surgery done over the holidays.  I went to one hospital, got charged $2000 for them just to find out what was wrong, then they wanted to charge me another $7000 to fix the problem.  I said, well, okay...can I pay you off over the next four years?  They said, "No, we want it in 18 months or we're sending you to a collections agency." 
 
I replied, "Okay, I can't pay you in 18 months.  No way."
 
The reply: "Then I guess you're not getting the surgery done."
 
My reply: "Given that there is a small chance I might, you know, die without this surgery getting done, am I to understand you're denying me care because of my ability to pay...which is against the law?"
 
Their panicked reply: "Well, no, of course not, but if you don't pay us $9000 in 18 months, we're going to send you to a collections agency."  Which of course would ruin my credit rating and life in short order.
 
What I ended up doing was going to a different hospital, got the surgery done, and for a considerably less price.  I found out later that the first hospital bills itself as a "boutique" hospital.  I later asked the first hospital's admin people when we had become Soviet Russia, where the Politburo gets the nice hospitals and everyone else just makes do.
 
The problem is, when you don't really care if your patients live or die as long as you get paid, this is what's going to happen.  Doctors care about their patients; those who don't find themselves out of the practice very quickly as word spreads.  In my experience, the price I have paid for doctors has been reasonable--$750, $2200--and they have been very reasonable about payment plans.  The hospitals, however, tack on an extra $2000 or $5000 for the use of facilities.  I don't mind paying for the facilities, but you're not going to tell me you need an extra $5000 to pay for nurses and supplies, especially when the doctor provides his own and the anaesthesialogist is also billed separately. 
 
The other thing driving up costs is malpractice insurance.  Lawyers have found a gold mine in lawsuits, and many of these lawsuits are trivial at best.  Doctors have to raise their fees to cover their insurance.  A lot of them are simply getting out of the practice, because the risks are too high.  I joked with my surgeon that if he made me sterile (an impossibility with the surgery being done), I was going to sue.  He almost refused to do the surgery at that point, because he didn't realize I was joking.
 
Are we going to get this kind of reform? Nope.  Lawyers aren't giving up their gold mine; CEOs aren't going to throw away a $200,000 a year cushy job just because a few patients keel over here and there.  So naturally, they're all for nationalized health care.  They won't lose their perks.
 
 
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CJH       5/2/2009 5:22:18 PM




I suspect that healthcare outcomes are the result of lifestyle choices to a great extent.

 

You can't eat at any but the more trendly eateries here without running the risk of getting a whole lot of fat. 



 We have in this country large groups of people who value the pleasure of eating or drinking more than their health.



 I believe there are a lot of people who don't get screened early for problems. A lot won't see a doctor until they are in a bad way then they'll go.



 So behavior or lifestyle choices are a large part of the outcomes problem. It's a matter of culture and education I guess.




Granted lifestyle choices matter a lot. However, if you are spending 50% more on healthcare than comparable countries without at least doing a bit better in health outcomes you surely would start to question whether you are getting a decent bang for your buck out of your system.




Do we not do better than other countries dollar for dollar given that people here eat things which give them such conditions as apparently avoidable atherosclerosis and adult onset diabetes and given that government and insurance interfere with the practice of medicine?
 
Of course we also have a lot of communities where it is common for there to be a lot of violence and drug use. Intervention required to deal with the healthcare results of those is costly.
Prevention is a pretty big way to avoid cost. And it is urged here that market forces can serve to pare away inefficiencies.
 
On the other hand, what government healthcare is is a rationing scheme. It limits access as a means of limiting cost.
 
Our goal should be to maximize prevention, maximize access and maximize quality (realize efficiencies maintaining maximal efficacy).
 
 
 
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