June 2, 2009

They're Going To Get Paid No Matter What

If we reduce the costs of tests, visits, and medications to 20% of their current price, how much will overall healthcare expsenses be reduced?

I.  Is the security technology of electronic healthcare records good enough?

The security problem with electronic health records isn't encryption or firewalls, it is nothing that can be fixed with better technology.

The real issue issue is the people who already have access to the records: the 10000 people who work for a university hospital system-- or the 2000 that just got laid off, looking to make a fast buck. 

The real risk is if you are in a divorce proceeding and your spouse wants to use your mental health against you; or your boss/employee wants to know if you're gay; or your insignificant other wants to know etc etc.  So someone makes a call to that guy they know who works there...

How could I not be tempted to look up my nurse-girlfriend's medical record... just to see?  How could my brother not be tempted to ask me to look up his girlfriend at my hospital?  How could janitor #7 not be tempted to ask secretary #895 to look up... for the purpose of...?

All this goes on already, and so far the records are only accessible within the system.  Imagine what will happen when they are nationalized.

The analogy for electronic health records is not financial records.

If you want a working analogy for the world after electronic health records, it's facebook.


I hope I don't need to point out that there's a billion-- 19 billion, actually- dollars behind EHR; about $10k/year for five years goes to the doctors, and the rest, I assume, goes to lobbyists.  No, I haven't done the math, it's an estimate. 

Most of the content in the record is information bias.  It seems important because it exists.  Do you need to know your fiancee's driving record before you finally pop the question?  Of course not.  But if some guy says, "I'll tell it to you for free--" would you say no?  Information bias.

All medical information is redundant.  That means each doctor has to find out for himself.  Sure, we use them as a shortcut, but we would never act on them.  To do so would be negligence.  In other words: trust, but verify.


Here's a hilarious story about EHR:

At the same time (that Farrah Fawcett was fighting to prove someone at UCLA was selling her medical records to the media) UCLA repeatedly asked her to donate money to the hospital for a foundation to be set up in her name.

The university went so far as to give her a prewritten letter that she could sign and fill in a dollar amount for the foundation, documents show. It also created an official-looking proposed announcement that said, "Ms. Farrah Fawcett has established a fund in the Division of Digestive Diseases with the expansive goal of facilitating prevention and diagnosis in gastrointestinal cancers."

See?  They think that having a wing named after her will make up for the fact that she's dying and that one of their employees sold the records.

But a hospital is a business, they're going to get paid somehow.  Anyhow.

(For a million reasons and this one, you do not want nationalized electronic health records.)

IV.  EHRs Are Really About Pretending To Reduce Costs Without Actually Reducing Costs: That's Why The AMA Is Behind Them 

The point of EHR is, of course, that it will "reduce costs."  Oh my God.

The cost of healthcare has nothing at all to do with the value of healthcare. 

If you cut the reimbursement for tests, procedures and visits, and the cost of medications, to 20% of their current cost-- you will not reduce the total spent on healthcare even one cent. 

Got that?  No?  I will repeat it, for emphasis:

If you cut the reimbursement for tests, procedures and visits, and the cost of medications, to 20% of their current cost-- you will not reduce the total spent on healthcare even one cent.

The simple reason for this is basic economics: supply and demand.  The reason people can't see this is that they have misidentified the supply and the demand.  They think demand for healthcare comes from the patient, and the supply is allocated by insurers via doctors.  Wrong.  Doctors are both the supply and the demand.

Do you think that if reimbursement goes down, doctors will say, "ok, I guess I'm in a lower tax bracket?"  They will simply ramp up their business.  See more patients, order more tests, whatever.  Maybe they'll buy the test machines for their office and bill the insurer for the services (e.g. an x-ray machine.)

They're not unethical, they're not trying to mismanage patients, they are just trying to survive.  Why should a Goldman Sachs trader make three times more than him?   They'll do whatever is necessary to help the patient, and whatever necessary to get paid.

Healthcare is a business.  The business of healthcare is business.

V.  What's the solution?

The solution is nuanced.

Part 1 is that you have to remove the incentive to increase the utilization of healthcare:   doctors have to be salaried.  I can't believe I just said that, but it is true.

The second part is the tricky one: you have to change the culture of medicine, the mindset of doctors.  You have to make the natural reflex of doctors not to try to make more money, but to use less healthcare.  That's nearly impossible, which means that it will fail in this generation.

So, President Obama, take the long term view: doctors become salaried starting 2020.

Face it-- doctors today are smart enough to find a way to beat the system.  I am smart enough to beat the system, and it is impossible to expect me not to try to beat the system because I believe that I am not acting against the interests of society in doing it, even though I am. 

But eventually I will die. The idea of a 2020 start date is that it will change the type of person who decides to become a doctor. Like academic researchers: no one goes into it for the money.  I didn't go into it for the money, either, but when I got here there were opportunities to make money.  How could I not take them?  All of those considerations have to be removed.  Then you will get a new kind of person trying to become a new kind of doctor.

Yes, this new kind will have problems of his own (apathy, institutional bias, etc.)  But it will cost less.  That's what you wanted, right?


Interesting. Did you write... (Below threshold)

June 3, 2009 1:43 AM | Posted by Galapagod: | Reply

Interesting. Did you write this in reaction to the Cost Conundrum article in The New Yorker? If you haven't read it yet I would recommend it -- some similar areas covered.


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You seem to have missed a f... (Below threshold)

June 3, 2009 12:14 PM | Posted by Dan: | Reply

You seem to have missed a few major influences of health care costs with your solution to make doctors salaried.

1. The incentive to run tests is not just driven by the need to increase billables, but also to provide legal cover. I think it's safe to say that the majority of MRIs and CAT scans ordered from ERs are unnecessary, but that's not to make more money -- since it doesn't increase the amount the ER doctor makes, but to cover their a**.

2. Doctors already are salaried in some hospitals or in larger practices (although some may also share in profits). They are still pushed to increase billables by the company for which they work (hospital, practice, etc.). How do you "salary" a hospital? Nationalize them all?

The current mess of health care costs was initially created during WWII's wage controls by the need for employers to compete for labor, and unions to negotiate for better pay packages, with increased benefits. This resulted in elaborate health "insurance," which was really employee-provided health care rather than protection in case of catastrophic injury or illness.

Adding more bureaucrats and lobbyists to the mix may shift costs from individuals and employers over to the government, but overall costs are sure to go up. Or worse, health care could be rationed. Most likely, both.

How about unraveling the current mess by shifting the control of health care spending back to the patients? How many unnecessary tests would a patient agree to if they were paying all or part of the cost? Doctors already make decisions on tests and prescriptions based on the patient's insurance coverage, or lack of it.

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wow. i am impressed at the ... (Below threshold)

June 3, 2009 1:20 PM | Posted by mel g: | Reply

wow. i am impressed at the breadth and specific detail of the thinking here. not like any of it's shocking or unexpected, just that someone would SAY it, notice it and call it out. thank you.

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Salaried doctors, rationed ... (Below threshold)

June 3, 2009 2:34 PM | Posted by Jack Coupal: | Reply

Salaried doctors, rationed medical procedures, Department of Veterans Affairs medical centers as the chosen model for all American hospitals, federal permission for you consult this doctor (but absolutely not that one).

all reasons why Obama's Nationalized Health Care plan will remain dead in the water.

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I think that looking north ... (Below threshold)

June 3, 2009 4:01 PM | Posted by Andrew R.: | Reply

I think that looking north of the border might be useful on this one. I've had health care from Ontario's health insurance and I've had health care from American job-based insurance, and for all intents and purposes, I was unable to tell the difference between the two.

And yet, here in the States, doctors and hospitals bill Medicare, Medicaid, Humana, Blue Cross, etc. for pretty much whatever enormous numbers they make up, and, as far as I can tell, these entities smile and pay up. In Canada, doctors and hospitals perform the same services, but they bill the provincial health insurance/private supplementary insurance for much less. I wonder if it would be possible to do something similar with America's regulatory regime.

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It is possible, just not pr... (Below threshold)

June 4, 2009 4:26 PM | Posted, in reply to Andrew R.'s comment, by David Johnson: | Reply

It is possible, just not probable. Aside from the hilarious statement "They're not unethical, they're not trying to mismanage patients, they are just trying to survive. Why should a Goldman Sachs trader make three times more than him? They'll do whatever is necessary to help the patient, and whatever necessary to get paid."

Ah,the poor plight of the doctor trying to "survive" in america. The poor plight of the surviving doctor trying to keep up with a Goldman Sachs trader? Imagine the plight of a carpenter trying to survive and trying to keep up with a Goldman Sachs trader. Such sorrow I experience.

I don't think it's probable, because the health industry has co-opted doctors in general (notice the construct of the last quoted sentence- "they'll do whatever is necessary to help the patient and whatever necessary to get paid-" it's not an and/or proposition. No pay, no care. Another way of expressing this ... and far more graphic: "death by spreadsheet."

Love the 2020 date. Let's apply that argument to the auto industry workers, eh? After all, they came in expecting certain wages and benefits. Oh yeah, I forgot. Doctors are special. It's 13 years worse than the unbelievably disingenuous "trigger" plan. What a farce.

It's amazing Canadians, and French and British and Germans and Japanese and others have managed to do what this country is too stupid, too short-sighted and too greedy to accomplish: provide universal health care.

//end rant

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Nice post. Here is what thi... (Below threshold)

June 5, 2009 10:09 AM | Posted by MedsVsTherapy: | Reply

Nice post. Here is what this change will look like: physicians will move into the position of highly trained technicians. Currently, in many ways, docs are the authors and managers of healthcare. They determine what illnesses there are, and determine how to diagnose, and how to treat. Docs are generally highly involved in most health care operations, excepting health insurance companies and possibly pharamceutical companies.

The fact is: we have docs in control of health care - hand on the rudder - but there is no reason for this - healthcare expenses will change when health care begins to be managed like any other business that is dependent upon, but not run by, highly skilled technicians.

My analogy is the auto repair shop. If you have, or borrow, enough money, you can open your own auto repair shop - even if you have no idea how to fix anything on a car. How? You hire highly skilled technicians to diagnose car repair problems, and fix them. You pay them salary plus commission based on productivity (how many repair jobs per day/week/month) and quality (was the problem fixed well enough for the customer to pay and drive off the lot).

I have a friend who has opened tattoo parlors. He does not tattoo. He hires highly skilled technicians: people who are able to skillfully, safely apply the tools and salves to the human body.

How will physicians lose the reins of the health care business? Maybe by the govt getting involved with universal care. Alternately, by AMA losing power. How will that happen? If physicians increasingly fail to buy in to AMA - for various reasons. What docs are not med-school trained to salute the status quo? Foreign-trained docs. How many foreign-trained docs are there now, compared to a decade ago? Or two decades? You already know the answer - lots.

A model for this scenario? The VA. It has already happened. With exceptions, physicians are generally in the VA hierarchy as highly skilled technicians.

This will end the influence held through the power of the guild. THen market forces other than the guild power (as noted by Milton Friedman) will be in full swing.

The New Yorker just ran a piece that is good food for thought, including a counter-example to the old, worn-out story of defensive medicine/"skyrocketing" malpractice rates (AMA declares you must ALWAYS use the term "skyrocketing" when discussing this issue, or lose membership). Link to New Yorker piece:

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Ditto what David Johnson sa... (Below threshold)

June 5, 2009 2:22 PM | Posted by Anonymous: | Reply

Ditto what David Johnson said.

Hasn't anyone ever watched sicko? Sure the movie can only encompass the experiences and opinions of so many, BUT every person I've known that came to this country from a country that had universal healthcare and one and all were covered, and had to pay what we pay to get healthcare here, had to go to the ER without any healthcare and then get the bill, or fly back home to get surgery and treament because it was unavailable to them here, they think we are all crazy in this country that we're unwilling to provide that for our fellow man. We're not crazy, it's just selfishness, egotistical rationalization of being a heartless greedy bastard, a culture that makes us all think that we're better than the guy next to us and how dare he or anyone else say that we have any responsibility to take care of those who haven't "worked hard enough" to be doing as well as we are.

Oh gee higher taxes, oh boo hoo doctors don't get paid as much. Buh-f*ckin-wah pharmacuetical companies can't charge F*CKING RIDICULOUS amounts of money for thier drugs. (seriously I could be driving a jaguar for what I pay out of pocket for ONE medication!!! That I DESPERATELY need and can not get onto a different one. That is just f*cking wrong, especialy considering that no other country is willing to pay these sorts of prices.)

You know what I make and work hard for my $1500/mo but I would GLADLY give $500 of that a month to the government for healthcare so that I could know that myself, everyone I know and every unfortunate person I do not know who has it even worse than me, could get thier medical needs taken care of. But all you damn upper middle class, rich folks don't want to give anymore of your $4 & 5G's a month to the government because they'll "missmanage it". THAT is BULLSHIT. It's an EXCUSE to be greedy jerks with no concern for your fellow human beings well being. EVERYONE can live off 3 grand a month, EVERYONE. I'm not saying we need to go communist, but seriously, you can't kick in another $500 out of $5,000, or $6,000 or $10,000?? What? Would that mean that you couldn't have a plasma screen in every room in the house and you'd have to stick with a regulat TV set? You're kids wouldn't have every video game on the earth, and Ipod, the best cell phone, thier own computer, that they'd have to go outside to play? You'd have to have a timeshare instead of your own vacation home? You have to go to Hawaii instead of Tahitti? You have to shop at bellair instead of whole foods? Give me a break!

There are people eating one meal a day, with medical conditions going untreated, trying to scrape by long enough to see if maybe this time they'll get SSDI so that they can get treatment for thier illness and start working on getting better not JUST surviving... and THEY get looked down upon? They are seen as lazy, as slackers as users... THAT is just another EXCUSE to not do your part and kick in your fair share to make sure that every human being, at least in your own country, gets to eat 3 meals a day and have the security of knowing they wont be homeless soon. That they'll get the medications and treatments they need for thier illness(s), that they will be given the BARE NECCESSITIES needed by EVERY human being if they are to EVER be able to pull themselves "up by thier bootstraps", go back to school, get re-trained, and get well enough health wise to become a productive member of society.

No instead you'd all rather keep that extra money and buy non-neccessity luxury items because "you earned it" All the while looking down on these people as if they were scum and keeping yourself in the state of denial that allows you to be such pompus dicks. Do you not realize that if a person does not have the security of a roof over thier head and food and medical care and treatment for whatever it is that ails them, then there is NO CHANCE whatsoever that they can ever get out of that place and become the productive useful member of society 99.9% of these people WANT to be.

If you gave these people just the bare neccessities of life you would give them the chance to become someone with a shot at success. Yeah there will still be people who are either so totaly dissabled as to not be able to work, not being able to care for themselves, and there will still be people out there who instead of using the support they are getting to help themselves get into a better position, go to school, get trained for a job they can do despite thier dissabilities and illnesses. But you all really think that it's fair to punish those that far outnumber these groups, those that if given help would then end up helping themselves more than any welfare ever has, because a few of the people on the recieving end of social services are lazy and don't want to do anything more with thier lives?

It's the same stupid selfish shit that is causing the USA to have such total sh*t public schools, making it soooo hard for your own children to go to college, turning our country into a bunch of idiots, all so that those with more can keep more and have more toys to play with.

I really think that the way our country is set up it's set up to turn everyone with money into sociopath a-holes that stick thier noses high in the air and say "Oh, weeeellll, if that person was worth a damn they'd find a way to take care of themselves."

HA HA HA HA HA HA!!! Well look how the mighty are falling. You'll all soon be suffering with the rest because the worst of this economic nightmare is hardly even begun. Maybe then when you're homeless and you can't get any help or health care you'll think back and say "Gee maybe I should have been willing to contribute more to these programs instead of being a selfish DICKHEAD and assuming I was soooooo much better than everyone else and there was no way that I could ever fall soooooo low as to be "one of those people."

I LAUGH every day the dow falls 200 points because I know somewhere out there some greedy a-hole is crying over being less rich today than they were yesterday. Yeah and once they're actually poor, they'll probably blow thier brains out because they're all soo damn petty and so full of delusional bullshit about how they are a worthwhile human being because god graced them with the ability to make buckets of money... all the while looking down on anyone who "can't take care of themselves". Once it happens to them I don't think it's much to expect the suicide rate to start rising. And why should I care? Right? I mean they didn't want to pay higher taxes to help those they could have when they could have, they have no care for the common man, so why should I as a common man give a crap about them. Except to laught about it. I'll still be poor as dirt, the system is set up to make it pretty damn hard for someone in my condition to make it to a point where I can make enough money to do good with it not just for myself but for others. Not just giving those I love EXCESS, but taking what I need and using the rest to be a decent human being and help those with nothing find a way to get back something. So at least if I can't make it, and until I can make it, I am just going to keep on laughing every day. Yeah good people are suffering too, there's nothing I can do about that, all I can do to keep my hopes up is to keep reminding myself that the motherf*cker self absorbed greedy sons of bitches that always vote to keep thier taxes lower, who stick thier noses in the air and look at those who's lives and health have conspired to put them in a really crap situation, and walk by thinking "I shouldn't have to help those people". Well they'll be standing in the soup lines with everyone else complaining, Why is it always potatoes, oh why has my god forsaken me, wah wah wah. Suck it up bitches, being poor isn't the worst thing in the world but it sure does make it a whole heck of a alot harder to "take care of yourself" and damn near impossible to ever get ahead.
Maybe you forgot what it was like, maybe you never had to live off crap food while putting yourself thru school. Maybe you have had a real bout of illness in your life and people came together to help you but now you've forgotten it all. I wouldn't know. All I know is there's going to be a whole lot of remembering and a whole lot of LEARNING how to have compassion for the "loosers" and "users" and whatever else the allmighty like to think of and call those not LUCKY enough to make it thru life with a decent paycheck or with a good ability to support themselves well enough to get ahead and not have any crap thing in life throw them to the floor as a broken heap and leave them so far behind in life that they could end up homeless because they don't have the savings to pay for the life sustaining medications or treatments they need long enough for the tight wad half assed social support and welfare system to kick in and help them.

You'll all learn compassion by living it. Those of us that already have compassion will be suffering right along with you but I think it will be easier for us because we already could immagine in our minds just how hard this is and at least had some mental preparation and idea of what to expect. And personaly I know a lot of people who wouldn't mind suffering thru this one bit if they could know for sure that it would mean that everyone would come out of the experience with the ability to care for and have compassion for thier fellow man.

I hope the dow plummets to 1,000 and everything goes to completely chaotic shit for awhile. THAT is EXACTLY what this country needs. People need to suffer together so everyone can get over thier superiority complexes and learn to work together and take care of each other. If I have to starve for a year and sell everything I own, live off of scraps, even if I have to die in order for that to happen, as a part of that process taking place, I'd gladly do it if it meant that the people in this country would come out of that experience with a new found respect for those who have fallen on hard times. I'm sick of living in a world full of narcassistic greedy artificaly made by media, culture, patriotism etc sociopaths.

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You know what I make and... (Below threshold)

June 7, 2009 11:04 AM | Posted by Jack Coupal: | Reply

You know what I make and work hard for my $1500/mo but I would GLADLY give $500 of that a month to the government for healthcare so that I could know that myself, everyone I know and every unfortunate person I do not know who has it even worse than me, could get thier medical needs taken care of.

I got a good laugh at Mr./Ms. Anonymous of 2:22 PM comment.

When the rubber hits the road and National Health Care is in place, I want to see the commenter pay 1/3rd of his monthly salary to the government so that everyone has "health care". His/her vow will disappear in a flash.

If someone can't explain reasons for a position without cursing and brow-beating opponents, that "position" must be weak. Even Congress and Parliament don't allow such tactics in their heated discussions of hot topics.

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Anonymous 2:22PM, you compl... (Below threshold)

June 8, 2009 1:56 AM | Posted by Jimmy: | Reply

Anonymous 2:22PM, you complain about government-run public schools, but you want government-run healthcare?

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Very interesting article.I ... (Below threshold)

June 8, 2009 7:19 AM | Posted by Andy Stones: | Reply

Very interesting article.I agree with Jimmy and if people can`t stand government run school then how they will tolerate govt. run health care. I believe that the medicine should be prescribed by doctors personally not by some bot.

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This post is quite good. It... (Below threshold)

July 13, 2009 6:57 AM | Posted by Lestat: | Reply

This post is quite good. It somehow flows into a more realistic view of what is truly happening and how much insecurity it poses to every individual causing some dilemma to surface.

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