My email is email@example.com. Snail mail is 3514 NW 67th St., Seattle WA 98117. The local voice number in Seattle is 206-782-1277.
If you are seeking physicians for your Group, Company, Managed Care Organization or Hospital; or if you require Expert Witness Services regarding physician compensation, contractual issues, supply and demand issues or candidate placeability issues, please call me at 206-782-1277 or use the E-mail button at the end of this page.
This page was last updated 11/20/2008.
Click Here to return to my main web page
As a physician recruiter I hear and witness the problems of our current health care system on a daily basis. So I wrote a paper which describes the problems and offers some concept level solutions to our health care systems problems. I am trained as a hospital administrator and have held a variety of positions in the health care field as an administrator, consultant and recruiter.
Chris Warner www.PantherEnterprises.com Physician Recruiting & Placement 3514 NW 67th St. Seattle WA 98117 206-782-1277________________________________________________________________________________
Americans Want Cadillac Medicine at Chevrolet Prices
The Current Situation
Demand for health care exceeds supply due to spending constraints by individuals and employers. This translates into burdensome regulations, delay or denial of care by a bloated paper shuffling bureaucracy of insurance companies, health plans and government agencies at all levels.
The evidence for this is clearly abundant. The third party insurers and health plans require a cumbersome approval process for treatments and procedures that physicians order for their patients. It has been reported that physicians are often forced to compensate for the patient by refining the diagnosis or treatment plan so the patient can receive the care the physician deems appropriate and necessary. Patients are dissatisfied with this situation because it limits their freedom of choice, adds a cumbersome expensive bureaucracy and delays and/or at times denies treatment.
The morass of government programs and private insurance plans is bewildering, extremely convoluted, complex and very expensive: Some say at a cost of five hundred billion dollars a year. Physician's offices are rampant with cascades of forms, paper, regulations, codes, manuals, phone calls, hair wringing and teeth nashing as a direct result of this third party oversight due to spending constraints by individuals and employers. As a result the basic fabric of our health care system is in grave jeopardy. Eighty percent (80%) of all physicians office practices and clinics are teetering on the verge of bankruptcy in California due to artificially high administrative overhead and declining reimbursements. The grave yard of failed groups includes Med Partners, Friendly Hills, AMI, Greater Valley, Mulliken, Caremark, Cigna and most recently KPC. A similar situation is starting to spread to Washington and Oregon. There have been major bankruptcies in many other parts of the country, one of the most notable was the Allegheny Health System in Philadelphia.
Hospitals are not in much better shape. Reimbursement constraints, the changing nature of the patient mix (more patients with a high degree of morbidity and the loss of lucrative out patient business to surgicenters and stand alone radiology and diagnostic centers) and the requirement for them to accept all who show up have taken the toll. Hundreds of hospitals nationwide have gone out of business or merged to survive. Just recently here in Seattle, Providence Medical Center declared insolvency and merged with Swedish Hospital.
The less politically powerful states, all have reimbursement rates which are far too low to sustain the long term viability of their health care systems. They are WA,DE,HI,WY,OR,NH,NM,ME,VT and IA. They have been and are penalized for having efficient health care systems and having less clout in Congress. The Medicare reimbursement rates are set at a statewide benchmark average. The nongovernmental insurance plans set their rates based on the Medicare rate. These states deliver more cost efficient health care than most of the rest of the nation, hence the rates are lower. For instance, the expenditures for a Medicare patient is about $3,600.00 per year in the less politically powerful states. The average rate in the country is about $5,500.00 and the more politically powerful states, DC,LA,FL,NY,TX,CT,PA,RI,MD,CA have a rate of about $6,600.00 The less powerful states have tried to remedy the situation but to no avail. The Medicare pot of money is shrinking and no state wants to give up their allocation to make the reimbursement more equatable.
With substantially reduced reimbursement managed care plans have strangled providers, hospitals and especially doctors. They have essentially rationed care via a prior approval process. Doctors and patients are infuriated with the situation and are demanding a "Bill of Rights" for patients, a patently absurd situation for a country that spends one seventh of its GDP on health care.
On top of all this we have over 45 million uninsured whom we, the insured, pay for through taxes and our insurance plans that support hospital emergency rooms, community clinics and governmental health care facilities. The uninsured do get needed care in this country. People are not dying in the streets. It is just that the care they get is almost always curative, not preventive. It is very expensive because of the venue of delivery, the emergency room, and because the morbidity of the uninsured patients is generally higher than the insured patient. Progressive hospitals have started to create non emergency centers to ease the burden on emergency rooms and when possible collect for care from the uninsured. Recently the situation has worsened as more and more emergency rooms are forced to turn away patients either because they are at capacity or the hospital has no available beds.
As a physician recruiter I speak with dozens of physicians every day. More and more of the time I hear "managed care is killing me, the reimbursement levels are forcing me out of business." In California several thousand physicians have been laid off over the past three to four years due to the demise of physician practice management companies and the reallocation of providers. Often patients see a physician's assistant or a nurse practitioner as their primary care provider, not a physician. That may be fine for the flu, but hardly sufficient for adult onset diabetes. The practice management companies never anticipated the decreasing reimbursement rates and were either forced out of business, severely downsized and/or replaced physicians with physician extenders. This same scenario is currently taking place or has taken place in virtually all of the major metropolitan areas throughout the country.
The reason managed care companies are hammering providers is that the employers and self employed do not want to pay the increasing costs of health care that the employees demand and the self employed want. By and large the American public believes health care is a "right", and therefore they should receive a carte blanche health plan from their employers. They are very reluctant to pick up any of the tab themselves, witness the recent strike in Seattle against Boeing by the engineers and aircraft mechanics unions where fully paid health care was the key issue.
Health care is not a right. It is a service that has to be paid for like anything else. If we Americans want Cadillac medicine then we had better be prepared to pay for it.
America Compared to Others
I often hear that America spends significantly more on health care than comparable countries like the economic Group of Seven: Japan, Germany, Britain, Italy, Canada or France, all of whom have nationalized health care in one form or another. In reality comparison is difficult because these countries are all half or much less our size in population and have much more homogeneous population than the United States. They spend much less than we do as a percent of GDP but we have immediate access to care and high tech medicine which they do not, they RATION care. For example Canadians come south to the the US for procedures and treatment that they wait months, if not years, for in Canada. In Britain everyone who can afford it goes to a private clinic because the wait at the National Health Service are so long. Outside America one rarely sees a patient over 60 years old in a national health system intensive care unit. The older patients are given general care or cared for at home. They do not reap the benefit of intensive, potentially life saving care and treatment, that care is saved for younger people, it is rationed.
It is true that over all Americans have about the same morbidity and mortality rates as the other six of Seven; however we arguably have a better quality of life. Examples of "non rationed" procedures available here, not readily available in the other six, are hip and knee replacements, coranary bypass, cataract surgery and kidney transplants all of which contribute significantly to quality of life.
We in the US have entered into some questionable practices ever since the federal government got involved in health care. The first was the destruction of the charitable care system doctors used to give those patients who could not afford medical care. Prior to 1965 many medical societies in the country mandated that as a condition for membership (membership was a prerequisite for a state license to practice medicine) the physician would spend one day a week at the county hospital caring for the charity patients. With the advent of Medicare and Medicaid suddenly the physicians were in a position to get paid for patients they used to treat for free. So we replaced a working charitable system with a tax eating government bureaucracy.
Another much more recent phenomenon was the creation of Medicare and Medicaid HMOs. What a crazy idea. A HMO is predicated on the premise that for a negotiated fee it will care for all of its members, with the age mix and the morbidity mix being about the same as the general population. It would also attempt to provide preventive care to avoid costly acute episodes of care. Well the Medicare/Medicaid population does not fit the model, and sure enough Medicare/Medicaid HMO costs skyrocketed. The federal and state governments cut back on reimbursements; the HMOs went broke; and the patients are heading back to the original program or seeking care in the emergency room. Those patients enrolled in these HMO plans have difficulty seeing their primary care physician because under the HMO capitated system, physicians have strong financial incentives to reduce the frequency of patient visits due to reimbursement reductions of the capitated amount per patient per month.
Another questionable practice the Feds and the third parties have done to try to cut costs was to reduce physician income. If you cut physicians income by 20%, it amounts to a difference of one tenth percent per annum in the growth rate of health care costs over 20 years. Well the Fed and the insurers cut physicians income and the result is that many practices are right on the verge of bankruptcy. Medicine is a piece work business, volume cannot make up for unit costs that exceed receipts. In most urban areas of the country physicians are under severe pressure to see more patients in less time because their margins are so slim. To make ends meet managed care plans are asking higher productivity rates for physicians, seeing more patients per hour. At that point mistakes occur and the quality of care declines or becomes downright dangerous.
I think it is safe to say that most physicians in urban areas are demoralized about the practice of medicine, their income has not kept pace with inflation over the past five years. Their medical decisions are often second guessed by insurance companies. The approval process to treat their patients is burdensome and the huge amount of paper work is horrible.
Health Care Spending
The aggregate spending for health care in the US is rising at a double digit rate. Why? The reason is pretty straight forward. The industry is innovative so we have new drugs, new surgical procedures and new diagnostic techniques. And, we buy a lot of them. The industry has actually lowered the costs of hundreds of procedures and treatments on a per unit basis. Since the outcome is so much better using the new techniques the market has expanded and spending has gone up. Additionaly new procedures and drugs have likewise pushed up spending as patients have rushed to get them to cure ailments that were untreatable just a few short years ago. Let me give you some examples that didn't exist ten years ago.
For gall bladder surgery surgeons now operate lapriscopically resulting in no hospitalization, better outcomes and lower costs per procedure. Patients are having more procedures because they have better outcomes and a better quality of life under the new technology. Fees for the surgery are half what they were before and there is little or no cost for hospitalization. However overall costs for the procedure are going up because so many more patients are having it to avoid chronic pain and discomfort. I just had the surgery. I walked into the hospital at 9 AM and walked out at 3 PM, the same day. People who had the surgery as little at 10 years ago spent three full days in the hospital.
Patients are flocking to laser treatment centers to have their eyes treated at a $1,000.00 per eye to avoid having to wear glasses or contacts. The outcomes are excellent; they can see much better; their appearance is enhanced and they feel better about themselves.
For millions of people world wide Prozac the anti depressant drug relieves chronic depression; makes them much more productive members of society, and enhances their lives immeasurably at a cost for a months supply in the US of about $150.00. Multiply that amount by six million US patients, and the cost goes up for treating a disease that was basically untreatable just a short time ago.
About half a million older patients in the US get hip and knee replacements every year. Ten years ago the procedures were painful and the outcome dubious. Today many seniors are able to stay out of nursing homes and are far more mobile. The cost for the implants is one forth of what it was and the hospital stay is half of what it used to be. Yet here again the total cost for this category of treatment has risen dramatically as the outcomes have improved.
Millions used to suffer from gastric ulcers and debilitating pain. Surgery was all too common a solution and long expensive hospital stays were the norm. Patients were on a restricted diet for years. Recently, a remarkable discovery; ulcers are caused by bacteria in the intestinal wall. Ulcers can be cured with the right antibiotic therapy at a phenomenal cost reduction for surgery and hospitalization, yet the cost for specialized antibiotics rises significantly.
Diseases that were fatal just two decades ago are now chronic due to medical technology improvements. We are living longer, but we are living better. Examples are HIV, heart and lung disease. The cost to care for these patients is staggering compared to 30 years ago where they would have died because we lacked the technology to keep them alive.
I could go on and on. What has happened is that as new techniques, products and drugs have become available, new markets have been created where none existed before. As patients have used the new techniques, products and drugs the costs per unit have declined dramatically. However the rate of spending has increased as more and more patients have taken advantage of the new technology. Sorta sounds like cell phones doesn't it?
The spending is going to go up significantly as baby boomers age and the fruits of genetic discoveries come to the marketplace as a result of the human genome project. New genetic therapy is just over the horizon. We ain't seen nothing yet.
Where We Spend Money Innappropriately
I am arguing that appropriate health care does not cost too much. We are spending more on a bunch of "new stuff" for that care. We do however spend too much in certain areas. The first involves the uninsured. As stated earlier, they are getting their health care in the most costly environment and the cost to the system is buried. We need to ascertain the costs of episodic acute care for the uninsured and determine how to treat them more effectively. Often they have a progressed disease state that could have been easily prevented with timely intervention or, they give up, go with out treatment, and are much less productive in the workplace or in their parenting duties.
We need a state and or national program to address the problem of the uninsured. Ironically we have one, Medicaid. Obviously Medicaid isn't broad enough in scope. Forty million slip through the system because they are not poor enough to qualify. Additionally it is by and large a curative program, not a preventive one.
The scope of Medicaid should include the current uninsured, the working poor. It should remain a state/federal hybrid plan. A minimum set of insurance benefits, a basic health insurance plan should be available for everyone who wants to purchase it. The basic plan could be available through Medicaid or perhaps, and preferably, the private sector. The prices of some goods and a lot of services will rise somewhat to pay for the plan but the overall expense to care for the uninsured should decline on an inflation adjusted basis; as the use of expensive emergency rooms declines and more cost effective venues are used like physicians offices and community clinics. There also is a good likelihood that uninsured's overall quality of life will improve and they will be more productive members of society.
Self inflicted disease or injury is the second area where we spend too much on health care. Examples are automobile accidents, firearm accidents, obesity, AIDS, alcohol, drug abuse and smoking. Education is probably the best way to address these issues and it appears that some progress is being made in some of these areas. We might consider an additional incentive by charging people who put themselves at risk to pay proportionality more for their health care. So if one has an auto accident both automobile insurance and health insurance premiums rise.
The third area is the recent disturbing trend to reduce home health care for patients who can get by most of the time in their homes with some assisted living care. It costs far less to care for a person in their home than to place that person in a nursing home or an assisted living home. Several years ago Congress cut federally funded home health programs by a third. The result is now just starting to manifest itself as these patients are forced to seek much more expensive alternatives for care.
The fourth area is the high cost of prescription drugs. The pharmaceutical companies do a great job. We can now treat arthritis, balding, impotence, depression, obesity, cancer, heart disease, ulcers and diabetes in ways only dreamed about in Star Trek. However the unit costs for drugs, unlike most of the rest of medical care has increased, not decreased for Americans. When Americans go to Canada and Mexico to obtain the identical drug at a fraction of the price, there is a problem. The drug companies argument about the high cost of research and development borders on being specious when the cost of marketing a new drug exceeds its R & D costs. It is interesting that the drug companies refuse all attempts by outside auditors to perform a cost accounting on new drug development.
The fifth area is the prolonged medical support for both the terminally ill and newborns weighing under 1500 grams. We need some guidelines that address issues such as when to suspend treatment for the terminally ill. The state of Oregon has made a good start. The costs of keeping the terminally ill in an intensive care unit is astronomical. Likewise the cost to provide neonatal care to babies under 1500 grams is questionable. The ideal situation would be to prevent these premature births; this should be a top priority for medical research. The data is clear on babies born under 1500 grams. Only a small percentage of them live normal lives and most die within a year or two. Dispite all we spend for neo-nates their survival in the US is the same as it is in other western countries where their expenditures are far less. The amount of resources devoted to these children could benefit hundreds of thousands of other children in the form of well baby checks and vaccinations. I realize, if the patient in question is your child or grand child, then the decisions are awful and heart wrenching.
A corollary issue is the distribution of scarce transportable organs. The governments current proposed policy of giving organs to persons who have waited the longest is flawed. The organs should be shared nationally, going to those with the best chance of survival. It is wrong to give a heart to someone who has smoked for thirty years, whose lungs are in terrible shape, and whose plumbing is shot, just because he/she has been on the waiting list longer than patients with a much better chance of long term survival.
Another area is that of physician malpractice insurance. Things have gotten out of hand as juries make huge awarads to plaintiffs. The situation is so bad in some states that physicians are leaving for greener pastures in droves. Current examples are West Virginia, Nevada, Florida, Maine, Pennsylvania, Texas and Oregon. California seems to have the right solution where awards are capped for pain and suffering.
The last example is that of the over supply of medical personnel and resources in certain areas of the country drives up the cost of care. In Portlad OR the annual per capita cost for a Medicare patient is about $3,900 but it is about $7,500 in Miami FL yet the patient outcomes are virtually identical. It is just that where there is a glut of physicians and medical resources the medical spending increases.
The first place to start is to eliminate the tax break that gives 172 million Americans tax free employer provided health care coverage. Health care has to be uncoupled from the workplace and employers need to pay employees more in wages so they can afford to purchase their own health care. People successfully buy houses, cars, appliances, computers; home, fire and auto insurance and everything else. Why can't they purchase their own health care and health insurance? The current system distorts the marketplace and often forces people into health plans they don't want, seeing physicians they would not choose themselves.
We need to move health care decisions from third parties to individuals and their doctors. We need a single payor health care insurance company. We have one now, it is called Medicare. We need to allow people to purchase their own routine health care and purchase health insurance protection for large expenditures and catastrophic events through this single payor. That is the way car insurance works. We all pay for routine automobile maintenance, repairs and minor accidents. The insurance just covers big things. People should be responsible for their health care up to a personal limit which would be a sliding percentage of their income. Then their health insurance coverage would kick in, a stop loss like provision. In a single payor scheme there would be uniform claim forms and coding systems to minimize the paper work burden, better yet the process should be made fully electronic over secure networks. In our current system the private insurance plans cost of administration and profit is 20-30%, Medicare's is 6%. This delta costs the American taxpayer about $500 Billion per year.
We need to vastly reduce the role of third parties and free people to manage their own health/medical care with their physician. People should pay for their own health care with the money now spent by their employers for pre paid health care. People can then decide what the value of health services are for themselves, they must be free to allocate their income according to their own values. People who refuse to purchase health insurance, should be held accountable if they face a large expenditure, like a mandatory wage garnishment. There will always be those few without income or insurance. We as a compassionate society will have to make sure the Medicaid system covers these unfortunate souls.
In the final analysis we in America need some fundamental changes in the financing of our health care system that gives the people the freedom to purchase health care the way they purchase everything else. The government has a role to make sure there is a health insurance program available for everyone, perhaps a single payor system, not prepaid health care like we have now. Employers and the third parties need to get out of the prepaid health care system and let the people and their physicians make the necessary health care decisions.Return To The Top Of The Page
Mail to PantherEnterprises.com ---- Copyright 2004 ---- PantherEnterprises.com ---- Chris Warner is the guy staring back at you.
Click Here to return to my main web page