A Healthcare Solution Everyone Should be Able to Understand
- Posted on: Feb 17 2016
By Gregory DeSanto, MD
Feb 17, 2016
I recently received a bill for my daughter, Hannah, for an emergency room bill at the University of Arizona in Tucson. The bill, as usual, made no sense. She had a minor knee injury and was in the emergency room for no more than two hours. She had a simple xray of her knee. The bill was over a $1000. My frustration and embarrassment in being a participant in the rouge business of medicine has spilled over again.
Here’s a modified version of a letter I sent several years ago to my representatives in Congress. I’m hoping that social media may help me gain traction this time.
I am an obstetrician/gynecologist, practicing in Scottsdale, Arizona for the past 20 years. I have seen the healthcare industry up close through my years in practice and my interactions with the insurance industry have enlightened me to the stark realities of a medical insurance industry that has little or no interest in advocating for their customers, due to perverse economic incentives.
No matter where a physician practices in the State of Arizona, there are patients each and every day that face the insurance system and are unfairly treated because of insurance gimmicks or because they simply cannot afford insurance anymore. There isn’t a day that goes by where I personally don’t find myself advocating for a patient on the potential or realized costs of healthcare.
I would like to finish my career working on behalf of my patients in medical system that works from a very basic premise: each and every person should be offered the same cost for care and it is our moral responsibility as healthcare providers to work to keep the cost of our care reasonable. The fact that a family of four now must pay over $800 a month and still come out of pocket for the 1st two or three thousand dollars of care is for most families untenable.
A while back, I was watching an interview on TV episode discussing nationalizing healthcare. Michael Moore, the film producer, a representative from the health insurance industry, and a former medical director from an insurance plan who rightly regrets now using her medical degree to deny care, were on the show. A family member from a patient who had died from leukemia had explained that could not raise the $150,000 needed fast enough for him to receive chemotherapy, because he did not have insurance. This is certainly a tragedy and Mr. Moore stated probably quite correctly that in Canada this would not have happened. He is probably right, but their quality of care would have been much less cutting edge and there would have been a large line in and impersonal care facing this patient. I found myself talking back to the TV. Why wasn’ t anyone asking why it costs $150,000 for the chemotherapy?
I am struck by the fact that no one ever asks the hard but very obvious question, why do certain procedures or treatments in healthcare cost so much?
Chemotherapy for leukemia shouldn’t cost one-fifth, maybe even one-tenth of $150,000 in a perfect world where costs were transparent. I am sure there would be entrepreneurs that could drive the costs down, based on volume and hard negotiations with the drug manufacturers Costs of highly technical services could be much lower if the incentives were aligned, still with an emphasis on quality. The key is to let the consumer choose where to go, based both on cost and quality.
John McCain, our senator here in Arizona, was similarly on a morning news show and was asked the question of what could be done about high health care costs. He stated very correctly that it never seemed to amaze him about the innovation and brilliance of medicine in our country. He then posed the question why, after the innovation, doesn’t the cost come down? He was on to the answer, but never completed the thought. I again talked back to the TV.
The answer to this dilemma lies in commoditizing much of what we do in medicine.
The very simple answer to John McCain’s question is to pass a law tomorrow that requires every healthcare provider in America to publish their prices for their services.
This includes doctors, dentists, veterinarians, hospitals, nursing homes, pharmacies, drug manufacturers, high tech medical equipment makers and everyone else remotely connected to healthcare. At this point, American’s can begin choosing their care and comparing care based on both quality and price.
This will upset many entrenched groups, particularly the insurers and those in niches in medicine that are relatively well protected. However, with transparency, access could open up to healthcare for new millions of patients, without the high risks of rationing. Medicine can be a growth industry without driving the costs of individual care up. By beginning to commoditize what we do, the costs should come down as resources are reassigned to the point of care.
In Silicon Valley and in the high tech industries, a new idea or product has an upfront expense to development and an associated high cost to purchase initially, but eventually the costs come down as the dreaded word “commoditize” comes to bear and others enter the field. Commoditizing in high tech frequently involves continued improvement, despite lower prices. Good examples are flat panel TVs, computers or cell phones. This doesn’t seem to happen in medicine, all because the costs are so mysterious.
Wal-Mart similarly began a generic prescription program about 10 years ago that has revolutionized the pharmacy community. They created a $4 prescription program for 30 day supplies of hundreds of commonly used medications that was eventually matched by Target and later most of the large pharmacy chains. A very good birth control pill, the generic form of Ortho-cyclen and Tricyclen was offered at $8 per pack, a dramatic savings over the standard $20 generic or $50 brand name. Since the government has required birth control pills to be a covered benefit, the price of the pills is now more than $20. This reflects what happens when government creates artificial pricing.
Doctors and hospitals are in great degree responsible for the perception of the extreme costs of medicine that perpetuates a vicious cycle of extraordinary bills (the term “magical” is very appropriate) that are eventually negotiated down by the insurers to 30 or 40 cents on the dollar. In the interim, each of us continue to buy unnecessarily expensive insurance to avoid a bill that no one can understand but threatens to bankrupt us. The insurance companies hold all the cards and get to control of even the first dollar of everyone’s healthcare.
I am so proud to be associated with hospitals that treat each and every patient the same, when the come in the front door, but I am similarly embarrassed to find out those without insurance or poor insurance are treated so poorly by the billing departments after they leave.
Our hospitals now spend enormous time and money fighting between the fantasy bills generated by the hospital and the eventual contract price negotiated by the insurer. This serves no one well. In the middle, the consumer buys unnecessarily costly insurance for fear of getting cancer or some other catastrophic illness that will bankrupt them.
Hospitals, in particular, need to open up all their costs and charges for inspection by the consumer, allowing more consumer choice based both on quality and price. There is admitted necessary cost shifting taking place for unreimbursed care that needs be factored in to the bill that each of us receives. But there is also enormous waste and out of line overhead in hospitals that needs to identified and eliminated in order to deliver more care to more people for less.
I would envision a day where centers of excellence develop for more complex care, based on price and quality to do procedures better and more efficiently. Patients may have to travel for their procedure, but will receive the highest quality care at the most efficient price. There would finally be incentives to do a procedure on time, on budget and with the lowest likelihood of complications. The incentives would all be aligned and at end of the day, we would be serving everyone equally.
Simpler procedures done in doctor’s, dentist’s offices, and hospitals similarly should have transparency in cost. Certainly, many patients would not opt for the lowest priced surgeon or dentist, but ranges in pricing would motivate doctors to be aware of other doctors pricing, which would result in a search for efficiencies in their procedures by negotiating their costs from suppliers, ancillary medical personnel and hospitals.
I would also envision $85 dollar mammograms and eventually $50 or $60 mammograms that are set up in convenient locations that everyone could afford. If left to smart businessmen. $100 annual physicals with complete blood work and an annual report to the patient with goals for the coming year would be the norm. Complete packages for commonly done procedures including all doctor and hospital fees should be open for everyone to see. Prices for chemotherapy and other high cost treatments should be outlined in detail, enabling patients and their families to shop for the most efficient treatments, based on their doctors advise.
We all know up front what it costs to buy our groceries or consumer staples. We pay up front and receive a competitive price. All of us tomorrow would like to know the up front costs for a dental procedure or a teeth cleaning. Why not at least ask what it costs to take out your gall bladder or tonsils?
Certainly most patients even now don’t know that ibuprofen is equivalent to Motrin at half the cost. How might you ask are they going to pick a quality doctor for highly technical cancer surgery, or to remove their bunion? In the age of the Internet, I am quite certain websites can be developed to assess price and quality, comparing doctors throughout the country or even the world. This is where government could serve an honorable purpose, by providing guidance in helping patients shop for care and avoiding unethical doctors and clinics with unproven treatments.
Additionally, prospective payment for most office visits and procedures would dramatically drop the administrative costs of healthcare, now estimated at 18% of our healthcare dollars. A recent study showed that each and every doctor in America is spending $70,000/year on administrative expenses to process insurance claims. Most doctors I know have one biller for every 1 to 1.5 providers.
90% or more of healthcare today is cost predictable. If payments for these predictable services were paid up front, dramatic cost savings could be achieved.
Insurers should get back to stratifying risks and get paid on managing risk in chronic or catastrophic care. Most of the routine care should be diverted to prospective payment with health savings accounts or some form of credit card deducted directly from health care funds. High deductible insurance should be left to serious medical incidents or chronic ongoing care. The time and energy spent today on the billing and collection aspects of routine healthcare is exactly what is wrong about the business of medicine today.
Before concluding, I must state that I am highly skeptical that Congress and the core American business principle of allowing the free market to reassign costs to the point of service are being unduly influenced by the medical insurance industry that is fundamentally flawed, but has extreme lobbying influence. This is the time to step up and offer a market-based idea that everyone can understand.
The status quo is not acceptable and significant and very fundamental changes are needed in how Americans pay for healthcare. The present debate has everything to do with serious flaws in the health insurance industry that are jeopardizing personal health and financial security and economic growth in the United States.
There are those that talk about the low moral aptitude of the insurance industry and the many Americans who have experienced the outright lies of the promise of private health insurance and the true economic realties of their business. It is the solution to this health insurance crisis, not the delivery of healthcare that we should be debating.
As we approach the next election cycle, it is critical to lay out a very simple and fundamental premise going forward for Medicine: transparency in pricing in everything that we do. In combination with prospective payment for most straightforward healthcare transactions, the principle of commoditization can move our country forward by providing more care to more people at fair and reasonable pricing and again restore our medical system as the envy of the world, based on price and quality.
Posted in: Insurance