A Physician on Health Care

The proposal of ACOG for health care liability reform and my ideas

2011-02-02T06:52:00.000-08:00

This is an excerpt from an email that I received from ACOG today
I support these ideas in order to make the system more FAIR and transparent.

"Statute of limitations of 3 years after manifestation or 1 year after discovery of injury.
Lawsuits for minors under 6 must commence within 3 years of manifestation or prior to the 8th birthday.

Limits noneconomic damages to $250,000.

Allows punitive damages only if: (1) the claimant proves a clear and convincing standard; and (2) compensatory damages are awarded.

Limits punitive damages to $250,000 or 2 times the amount of economic damages. 
Allows periodic payments of future damage awards over $50,000.

Allows the court to restrict the payment of attorney contingency fees. 
Allows introduction of collateral source benefits into evidence.

Does not preempt state law that provides greater protections.

Adopts a "fair share" model, where each defendant would only be liable for those damages attributable to their fault, thus eliminating the incentive to pursue "deep pocket" parties."

End of quote. Her a few comments from me:

Limiting NONeconomic damages is essential. Few lay people understand this. WE are not talking about capping the economic damages, nobody wants to take away the compensation for loss of income, the compensation for medical bills etc.
What we do not like is the "NON"-economic damages, the so called "pain and suffering". Pain and suffering is subjective. As soon as someone knows that he or she can make millions, he or she will experience much more pain and suffering. Believe me, if I was a plaintiff in court, I would suffer a tremendous amount - if millions are at stake. Slip and fall and become a millionaire - what a way to fulfill the American dream! Have postopertive bleeding and become a millionaire - wow! Have repeat surgery and become a millionaire!.
But, people in general are not that sneaky or sleazy. The prospect of gaining (or should we say gaming for) millions in "non-economic damages" or "pain and siuffering" is what drives attorneys. this is where they can make the big bucks, this is where they can rake in the doe, this is what pays for a yacht, for a new mansion and more, this is what turns an attorney into a "rainmaker" for his firm and what advances his career. The millions gained in malpractice suits is what is advertised in TV commercials "XXX millions gained for our clients" - sure, sure "for our clients" - and a 40% share goes into our pockets. They always forget to mention that in their ads.

Southern Florida, Miami, where liability insurance is abusively expensive and consequently many ObGyns do not carry any malpractice insurance, is a great example of what drives malpra tice suits. Once attorneys know that they cannot sue the deep pockets of insurance companies and there is no chance someone will fork over millions to plaintiff attorneys - lawsuits are .....just not done. The usual answer of an attorney to a plaintiff looking for a lawsuit against an ObGyn that has no liability insurance and no millions in personal assets is "Sorry, you do not have a case". Nobody sues a homeless person, nobody sues a poor person.
THAT is the current liability system.
THAT IS THE CORE OF THE CURRENT LIABILITY SYSTEM.

FACT: Remove the prospect of making millions and professional liability suddenly becomes inattractive to attorneys.
THIS IS THE ONLY REASON THAT ATTORNEYS HAVE RESISTED REFORM. THIS IS THE REASON THE STATUS QUO HAS NOT CHANGED
this is the true reason why we have an unfair system, where some get "lottery agins" and most stay on the outside and do not get compensated.

I would go much further than ACOG.
I propose "Patient's Comp" - something equal to "Workman's Comp". A patient is injured during medical treatment or due to lack of - he or she submits the case to a committee, which decides based on the facts, based on actual damage and then compensates based on economic loss in a broader sense. Done. No involvement of attorneys required. The money for compensation is paid by a fund, to which physicians and hospitals contribute - in a similar fashion as they now pay liability premiums. This removes the witchhunt like persecution of physicians, the guilt and shame and emotional unease on both sides (patient and physician), it increases open detection and discussion of mistakes and consequently fixing of errors. It makes compensation of injured patients not only much easier, but also much faster - it takes months instead of years!

Why do we not have such a system?
Why do we not apply to medicine what already has worked for the manufacturing industry for decades?
Because the manufacturing industry has better paid, higher paid lobbyists and pushed it through against the financial interests of attorneys! Physicians have not spent enough money on lobbying, that's why.
Malpractice attorneys would lose the chance of making millions and millions, in some caases even billions.
That's why. Follow the money!

We need "Patient's Comp"

A ray of hope - Obamacare might be declared illegal

2011-02-01T18:42:00.000-08:00

I could hardly believe my ears yesterday when I heard of of the decision of a federal judge in Florida that it is unconstitutional to force citicens to purchase health care contracts. The government might as well force us to spend money on gym memberships, on guns, on whatever your pet peeve might be. The government cannot not mandate what we purchase! What a reasonable position.
And no, the comparison with car insurance is flawed. We do not have to buy a car, buying a car is our choice. Once we have one, we have to operate it so that nobody gets hurt and we have to prepare for instances where we may accidentially hurt someone.
We do not chose to have a body! We are born with it. It is not a matter of choice as is the purchase of a car. A health insuracne is more about maintenance and disaster protection as compared to insurance against harm we may cause others and liability protection - which are the reasons we purchase car insurance.
Very nice touch also to quote Obama (by memory, may not be exact) "We cannot mandate health insurance or we might as well eliminate homelessness by mandating that everybody buys a house" Thank you for this insight, Mr. President! Thank you!
And wonderful also the statement that the insurance mandate is so central to the new health care reform law that the whole law has to be dumped.
I very much hope the Supreme Court decides along the lines of this ruling.

It is just my opinion, the opinion of a dumb little doctor, that it would have been much better to limit the reform to a simple few rules such as
"no lifetime maximum in payments"
"disregard preexisting conditions"
That would have been quite anough!

And I have to say - RESPECT, Americans! You really love your freedom. This lawsuit alone showed me more than anything else in the last 16 years I have lived in this country that American truly value their freedom. I had given up hope and thought that the giant USA had become complacent and weak and was ready to be domesticated by the present administration, by closet socialists and their "useful idiots". But, stop, wait, Americans are not ready to be converted into docile sheep in a high-tax, high-obedience herd where "paying taxes is patriotic" and being different and not conforming with the general rules is illegal. You will not be sheeps herded by the government - no Sir! You are still serious about the one true fundamental - freedom!
My hat off to you Americans!

The Physicians' Declaration of Independence

2010-03-18T09:03:00.001-07:00

- by Richard Amerling, M.D., New York, NY, April 2009

"When in the Course of human events, it becomes necessary for one Profession to dissolve the Financial Arrangements which have connected them with Medicare, Medicaid, assorted Health Maintenance Organizations, and diverse Third Party Payers and to assume among the other Professions of the Earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of Mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident: that the Physician's primary responsibility is toward the Patient; that to assure the sanctity of this relationship, payment for service should be decided between Physician and Patient, and that, as in all transactions in a free society, this payment be mutually agreeable.

Only such a Financial Arrangement will guarantee the highest level of Commitment and Service of the Physician to the Patient, restrain Outside Influence on Decision-Making, and assure that all information be kept strictly confidential.

When a Third Party dictates payment for the Physician's service, it exercises effective control over the Decision-Making of the Physician, which may not always be in the best interest of the Patient. The Third Party then intrudes heavily into the sacred Patient-Physician relationship and demands to inspect the Medical Record in a self-serving attempt to satisfy itself that its money is being spent in accordance with its own pre-ordained accounting principles.

The Financial Arrangements between Physicians and the Third Parties have become so destructive to the Patient-Physician relationship, and to the Medical Profession as a whole, that it is the Right, and Obligation, of the Members of the Profession to abolish them. Prudence will dictate that arrangements long established should not be changed for light and transient causes; and accordingly all experience has shown, that Physicians are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations evinces a design to reduce them under absolute Despotism, it is their Right; it is their Duty, to throw off such arrangements, and to provide new Guards for their future security.

Such has been the patient sufferance of this Profession; and such is now the necessity that constrains them to alter their former Financial Arrangements. The history of the present system is a history of repeated injuries and usurpations, all having in direct effect the establishment of an absolute Tyranny over the Medical Profession. To prove this, let Facts be submitted to a candid world.

The Tyranny began during the Second World War, when Companies, suffering under Wage and Price Controls, were forced to lure workers by offering Health Insurance Benefits. This benefit, in lieu of cash, received favorable tax treatment and was allowed to continue after the War, even with the removal of the Wage and Price Controls. This system created a strong incentive to use Medical Care and set the stage for massive Cost Inflation.

Slowly, insurance changed into payment for all Medical Expenses, minus a small and shrinking Deductible, which led to further Inflation, and a call to control costs.

The Government decreed that Employers must offer Employees the option of a Health Maintenance Organiz-ation. Thus were born the HMOs: Private Insurance Entities designed to ration Medical Care for their Members. These Organizations received Tax-favored treatment that allowed them to survive in spite of their horrendously flawed concept.

The Government, in 1965, in its Infinite Wisdom and going far beyond its Powers as set out in the Constitution, decreed that the Poor and the Elderly should receive Health Benefits funded by the Taxpayer. Thus came into existence Medicaid and Medicare. Medicaid, from the Conception, paid Physicians such a lowly wage that few participated, thereby creating a Two-Tiered System. Medicare payments to Physicians were initially fair and reasonable, and many Physicians participated in Medicare. Both Systems flooded the Medical Marketplace with Money, which fueled Inflation even more.

Alarmed by the Medical Cost Inflation that it had engendered, the Government set out to restrain costs, principally by limiting fees to Physicians. These Price Controls had the effect of increasing Medical Inflation, as Volume of Services went up, and Quality went down.

With each new round of Controls, Regulations and Paperwork multiplied many fold. This caused Physicians great Anguish, and took more time away from the Patients, with attendant loss of Quality and increase in Medical Inflation.

Government policies continued to favor the HMO, in the hope they would tame Inflation. These Organizations skimmed Money off the Premiums as Profit, but which they called "Savings." They spent less on Medical Care by denying or limiting access to Specialists, Procedures, Hospitals, and High Technology. Since this strategy mostly delayed care, it was ultimately more expensive. Thus did the Premiums again start to rise.

The HMOs paid the Physician by Capitation; Physicians could stay profitable by having large numbers of Capitated Patients, which they would see rarely, if at all! There were other Financial Incentives to Physicians to limit their Patients' access to Tertiary Care. These incentives set Patient against Physician, thus destroying this Sacred Trust.

Remuneration for Physician services by the Government and the HMOs has dwindled to the point of Unprofitability and has compelled the Bankruptcy of increasing numbers of Practices, and the search for Other Sources of Income by Physicians. No other Profession in the United States is denied the ability to raise fees to cover increasing costs of doing Business.

The Government, becoming increasingly desperate that all its strategies to control costs had failed (because they themselves were the cause of Cost Inflation!) resorted to Criminal Prosecutions of Individual Physicians and Hospitals for alleged Fraud. The Regulations being so Arcane and Vague, a simple Billing Error could be interpreted as Fraud. Most of those so pursued, being financially unable to defend themselves, simply capitulated and paid Huge Sums to the Government. Some were imprisoned.

The Government passed a Massive Bill called HIPAA, which forced Doctors and Hospitals to spend billions to comply, with absolutely no positive impact on Patient Care.

The Government passed a law called SGR which automatically lowers Physician Payment when total spending and volume increase, virtually assuring a downward spiral in Payments.

The Government and HMOs now conspire to limit fees to Physicians by a diabolical machine known as "Payment for Performance," based on "Practice Guidelines." In addition to insulting our Ethic, this system will close the circle between the Central Payment for Care and the Central Prescription of Care. Thus do we completely lose our Professional Autonomy.
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A System whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a Free Profession.

We, therefore, the undersigned Physicians of the United States of America, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name of our Patients solemnly publish and declare, that we will withdraw our participation in all above-described Third Party Payment Systems. Henceforth and Forever, we shall agree to provide our services directly to our Patients, and be compensated directly by them, in accordance with the ancient customs of our Profession.

As has always been true of our Profession, our charges will be adjusted to reflect the Patients' ability to render payment. Nothing prevents any patient from purchasing and using Insurance. The Patients' medical interactions with us will remain completely confidential. We pledge the highest level of Service and Dedication to their Well-Being.

And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

- Richard Amerling, M.D., New York, NY, April 2009

Please sign this declaration on the website of the AAPS! Thank you!

SIMPD Has a Better Idea

2010-01-02T12:27:00.000-08:00

Begin quote;

"Thomas W. LaGrelius, MD, FAAFP

President’s Address

Delivered May 5, 2008 at SIMPD annual meeting, Las Vegas, Nevada

Good morning SIMPD members and friends! Welcome to SIMPD’s fifth annual meeting here at the beautiful Venetian Hotel in Las Vegas. It’s great to be here with the most independent doctors around. We in SIMPD have lifted a page from managed care and created instead a network of unmanageable doctors, except by our patients. And our movement is growing.

Have you wandered through this place? I’ve been to Venice, Italy, but Venice, Las Vegas may be almost as grand. I hope you all have some fun here, see some shows and not lose too much money.

While you are here, connect with and comparing notes with your colleagues in direct practice from around the country. At this meeting you will find happy doctors who love their practices and know they are doing the best work of their lives. Our doctors take excellent, personalized care of their fewer patients, not just run past thousands of them on a mad dash from room to room to room.

Our attitude toward the practice of medicine is quite a bit different from the attitudes of our colleagues back home that are not in direct practice. Many of them are depressed and disillusioned. Some tell their children not to become physicians. Some look for ways to retire early or use their medical training to switch into non health care or even anti-health care occupations. (Being Medical Director of an HMO comes to mind here.)

We know better. We know the practice of medicine is exciting, rewarding and enjoyable.

I hope this meeting provides you with sessions that inform, inspire and assist you in your own practice goals. That is our purpose. Please fill out our program evaluation forms and tell us how we are doing.

How many of you are at your first SIMPD meeting?

When we first organized we called ourselves “The American Society of Concierge Physicians”.

How many of you were here for that first meeting in Denver in 2004?

By the time of our second meeting in Dallas in 2005 our name had been changed to SIMPD. How many were there?

How about the third in 2006 in Chicago where we spent so much money to hear Tommy Thompson talk, and maybe it was worth it. There were some bumps in the road for SIMPD after that, but we made it through.

Our fourth meeting in 2007 was delayed half a year, because of the bumps, until only six months ago in Washington DC, where Chris Ewin turned over the gavel to me after spending 18 months as president smoothing out the bumps. How many were there?

And here we are in Las Vegas for number five. We are young and small and the organization still struggles to provide services and better benefits to our membership, but a lot of folks outside of our movement are now asking about us who did not before know or care that we existed. Venture capitalists approach us with intriguing ideas to rapidly expand the numbers of direct practice doctors with their capital. The media call fairly often putting SIMPD’s name and web site in the public’s eye and thus bringing patients to you our members. Politicians too now wonder and ask if what we do could really be the solution to our gathering health care perfect storm almost everyone sees on the horizon.

I missed the first meeting in Denver but have attended all the rest. What I learned at my first SIMPD meeting in Dallas allowed me to launch my own direct concierge practice later that year. Without SIMPD my practice would be very different than it is today, and perhaps much less successful. The doctors I met in Dallas that first meeting were an inspiration. SIMPD promises to be an inspiration to all of our profession throughout the nation. SIMPD is a visionary organization. We know that doctors need to work directly for the right people, their patients and not for government, health plans or employers.

Until recently it was unusual to find a doctor present in the room where business people and politicians discussed their plans for our future. We were the forgotten victims of their well meaning but misguided schemes to reorganize health care. But now we are here at the same time and in the same place where dozens of other groups are dealing with all aspects of consumer directed health care. What an opportunity to show them our vision of the future.

I want to thank Transmarx and its CEO Skip Brickly for the hard work developing this meeting and making sure we are here participating with and connecting with business leaders in consumer health. Our thanks also to Walt Tudor our very effective day to day administrator, and all the other members of Transmarx’s excellent staff. Take advantage of this opportunity. Look around at all the meetings and investigate all the sponsor booths here. Talk to the business people here and teach them what needs to happen to save American medicine. Make sure they know that there is now a doctor in the room discussing the future of doctors and patients and not just waiting for the next hammer to drop on our heads.

So, where is American medicine and where is it going?

Modern medical science has made incredible strides in the advance of medicine, but our systems to finance its delivery are falling apart and actually damaging the critical doctor patient relationship.

You have all heard the litany of health care financing problems facing us today. It is said we spend too much money and get too little for it compared with other countries. But I submit that the individual citizens of the wealthiest and freest country on earth MUST have the right to spend more of their own money on maintaining the most valuable asset they have, their own good health. And it is our job to make sure they are really getting their money’s worth.

There are 47 million uninsured. Some say this is a crisis, but there are also 253 million insured Americans whose health plans and whose doctors working under the thumb of those health plans often serve them very poorly. Their doctors are working for the wrong master and in the wrong practice design.

We link 60% of health insurance to our conflicted employers creating gigantic problems for patients and employers that threaten not only health care, but our entire economy. This system is the last vestige of the 19th century “company store”, long ago abolished in every other sphere of human need. Our employers do not buy our food or housing or clothing. They pay us wages and we choose what and how much we want to buy as free Americans must.

Medicare, now covering 15% of Americans, is insolvent and will soon have a trillion dollar annual deficit. Yet some, like Michael Moore, suggest we make Medicare universal, as if that would solve our problems. SIMPD members know that expanding a failed system like Medicare to 100% of Americans will only cause a universal catastrophic failure with a ten trillion dollar annual deficit. We have a better idea.

One proposed solution, P4P (pay for performance) is a joke as administered by government, health plans and employers. Through this idea, health professionals are paid for more paperwork rather than for delivering care, and while our colleagues stare at the papers and the computer screens, medical errors kill 100,000 Americans a year because they do not look at their patients. In this election year, every politician has his or her proposed solution to our difficulties. Most are extremely unlikely to work. Again, we have a better idea.

Our goal is an error free practice, and we come very close to that goal. We have the time and the voluntarily given funds we need to improve the odds of getting to that goal. Because, there is a limit to how many patients a primary care doctor can care for safely and thoroughly, and it is a lot less than three thousand. It is probably less than 1000. It has been estimated that caring properly for 2000 to 3000 patients, the way we do for our more limited panels of patients, would require the primary care doctor to work 18 hour days six days a week. Some have questioned the ethics of concierge medicine. But is it ethical to take on a task one knows cannot be done safely?

In a recent Wall Street Journal op-ed, Dr. Jonathan Kellerman, a popular author and clinical professor of pediatrics and psychology at USC compared modern health plans and Medicare to the Mafia. He convincingly described their premiums as equivalent to payments to a protection racket. He accuses the health plans as being worse than a Mafia protection racket because they not only take money and deliver no value back, but then go further and interfere with the business of medicine to the detriment of both patients and doctors after taking their protection payment. Not even the Mafia goes that far. He makes the argument that less insurance rather than more is the solution to the health care financing plaguing our country. And though real insurance for high cost illness is important, we agree with Dr. Kellerman when it comes to basic health care. Americans should buy it directly and eliminate the meddlesome and costly middle man. That my friends is a much better idea.

The only payer that really values our services today is the patient, but most doctors don’t work for the patient. Last month I spoke to Dr. Katherine Atkinson, a family physician near Boston. The Washington Post had just published an article about her practice. She has a one year waiting list to get into her popular and excellent practice. After getting in for a first visit there is a nine month wait to set up a complete physical examination. She loses $20 a visit on each Medicare patient, but does not turn them away. She works very long hours, approaching those 18 hour days I mentioned. No one should work that hard, but that’s what it takes. Those of us who have tried to do it know it is true.

Nearby to Dr. Atkinson there is no doubt an excellent orthopedic surgeon who also works hard, but there is no one year wait to get into his practice. He earns $400,000 per year. Katherine Atkinson earns $110,000 per year and cannot afford to replace her aging automobile.

It is not that we begrudge the orthopedist or the cardiologist or the interventional radiologist their better pay, they too took a cut, albeit smaller, in real dollars in the last few decades. What we are saying is that the economics of medicine drive students to these specialties and away from the primary care dream most of them had at the beginning of their educations.

We are also saying is that good primary care medical homes reduce hospitalizations 60-85% resulting in huge hospital and high tech care savings. We are also saying is that any society that devalues primary care and attempts to run its health care primarily with specialists and a few overworked primary care doctors doing little more than mass triage will never control its costs or improve its quality of care no matter how many electronic medical record systems and pay for performance programs the third parties demand. If that society also believes health care is an inalienable right to be paid for by other people’s money, it will also go bankrupt.

We must work directly for that patient. That is the only way to restore balance. We must convince society that health care is not a right, but a service and a product that must be paid for, ideally by the consumer of the service/product in a free and transparent market. The consequences for our profession and for our nation of not doing so will be catastrophic.

There is another way. If we had 500,000 primary care doctors each providing a medical home for and average of 600 patients as I and many of you here do, guess what. Every single American could have such a direct practice medical home. Do the math. Half a million times 600 is 300,000,000! Imagine that. We would eliminate medical homelessness, cut hospital days at least 60%, save billions and billions of dollars and prolong and improve our lives. We have the answer to our American health care crisis right here in this room. We have a better idea.

Then we could still have 400,000 sub specialists who would be busy doing half the high tech care they do today. The other half would be prevented and much of it actually managed in the medical home instead of being fragmented into multiple consultant’s offices as we see so often today.

Doctors should apologize for allowing the current situation to exist. We allowed others to control health care economics and run it like Enron and the DMV. Physicians and patients must lead the way to solutions, and that is what SIMPD members are doing throughout the land. We are leading the way to a better idea and a better day for ourselves and our patients. In a way this is a return to the practice designs of our youth. It is in some ways a return to the Marcus Welby kind of practice some of us actually remember.

I grew up in Seattle, the birth place of concierge medicine, in a middle class neighborhood long before Medicare, Medicaid, PPOs, or HMOs were invented. Yet we all had excellent, affordable health care. Our family physician Russell Anderson provided us his home phone number, made house calls, saw us the same day when ill in an unhurried well equipped office with little or no waiting. He became my role model and remains so today. I even build my office from a mind’s eye blue print of his.

His was the equivalent of a modern, “medical home” such as SIMPD members provide. My practice is a “medical home” as are most of yours. What most Americans lack today is not insurance, but that primary care “medical home” with a doctor they can access 24/7 who coordinates all their care. A doctor they can see the same day, on time. A doctor who will care for them in the hospital. A doctor who hands them his cell phone number. A doctor who will spent thirty minutes seeing them in an office visit till their last question is answered. How many Americans today have such a doctor? Our patients do and they now number at least one million. Our goal should be to make that 300 million. That is another very good idea.

Russell Anderson’s practice was also a “direct practice” like ours. He had direct professional, direct prompt access and direct financial relationships with his patients. It was a direct practice, medical home like mine and many of yours, but unlike us he had a lot of company. Almost all his colleagues practiced that way in direct professional and financial relationships with their patients. They were accessible, affordable and affable because they worked for and were responsible to us, not for and to third parties.

Back then emergency rooms were quiet and saw only real emergencies. There was not a six hour wait behind a line of people with colds. We called our doctor instead, and he acted.

And, we were completely uninsured. So were most of our neighbors.

Back then there were 150 million Americans without health insurance, not just 47 million. And we amounted to 90% of the then US population, not just 15%. Being uninsured was the norm. And those who had illness insurance had it only for hospitalization, never for doctor’s fees or basic outpatient care. The uninsured were respected consumers of health services, not problems and opportunities for politicians.

We bought health services directly with little financial strain, just as we bought more expensive things like housing and food and cars. Today in contrast almost everything we buy in health care is funneled through insurance. Money and time is thus wasted while most doctors and patients have endless battles with insurance coverage, rules and bureaucracy for basic, relatively inexpensive care. Often it is easier, and a lot more satisfying, to care for the uninsured.

Our crisis is not really one of un-insurance. It is instead a crisis of “medical homelessness”. That “medical homelessness” is the result of insurance perversions having destroyed the free market in health care necessary to create value sensitive consumers and service oriented doctors. There are too many “third parties” meddling in basic health care.

So in America, doctors are working for the wrong employer. SIMPD doctors work for the right employer. We work for each and every individual consumer of medical services. We offer direct practice medical homes. That my friends, is the good idea SIMPD is all about.

In addition to concierge practices, cash practices with low prices now exist to serve patients and the service can be excellent. SIMPD member Dr. Robert S. Berry, a former emergency room doctor in Tennessee, runs such a practice called “PATMOS, named after the Greek Island where St. John worked and wrote, but also meaning “Payment At TiMe Of Service”. Dr. Berry has been widely recognized, appeared on 20/20 and the Geraldo show and testified before Congress. He was one of the first modern, excellent cash doctors to the uninsured but is no longer alone. His practice design is growing.

And another cash design, SimpleCare which was started in the Pacific North West by SIMPD member Dr. Vern Cherwatenko is another fine example. SIMPD is also the professional society for such cash doctors.

Outstanding, “concierge”, medical home preventive medicine and primary care including all needed treatments at that care level can be bought directly for $100-500 per month in a fee for care practice such as that operated by SIMPD member and founder John Blanchard in Michigan and SIMPD immediate past president Chris Ewin in Ft. Worth Texas and SIMPD member and author Dr. Steven Knope whose new book “Concierge Medicine” is now in the book stores and for sale here. Such retainer care can be purchased for less than most Americans spend on cell phones and cable connections. It costs far less than the amounts spend on food and a fraction of the amount spent on housing. SIMPD is the professional society for such monthly retainer fee for care doctors.

Another SIMPD member and former president, Dr. Garrison Bliss in Seattle just opened the second of seven new Qliance clinics, each with several doctors and nurse practitioners, aimed at caring for lower income Americans and the uninsured. Patients who join pay $39 to $74 a month age adjusted. For that fee they get 100% of all the primary medical care they can use, 24/7 direct access to their personal doctor, same day or next day on time appointments, regular check ups and a lot more. Not one cent of insurance money, government money or charity funds are used in his clinics. The care is paid for directly and entirely by the patients through their monthly fee, bypassing the expensive and meddlesome middlemen. SIMPD is the professional society for such retainer doctors to the uninsured.

Many SIMPD members, me included, offer fee for insurance non-covered services direct practice medical homes. We still bill patients and some insurance companies for covered services, but 75-80% of practice revenue is from a monthly or annual fee for services NOT covered by insurance. The best known national franchise practice with this design is the MDVIP network with some 200 quality doctors. We welcome its member doctors here today. We too offer same or next day appointment, 24/7 direct access, high levels of service and affordable wellness and illness care. Again, these practices provide the same excellent direct medical home environment for patients as do the fee for care practices. SIMPD is the professional society for such fee-for non-covered services direct practice doctors.

Both former SIMPD president Garrison Bliss and SIMPD member and Director Marcy Zwelling are independently negotiating with a major carriers to provide patients wrap around coverage for high-tech and hospital services our primary care doctors oversee but cannot provide alone. These insurance companies can be our friends. They can “get it” and understand what is needed and what is NOT needed.

This coverage will have rock bottom premiums because our patients use less hospital time and less high tech care. Published data, from MDVIP, suggests that such direct practice medical homes can radically reduce medical errors and cut high tech care by over 60%. That translates to better health, saved lives and lower cost. It can no longer be claimed that direct practice doctors do not deliver better health care. We do. And SIMPD must develop reporting tools to prove as MDVIP has done that the care delivered by all our members is better.

This is care like Russell Anderson used to give my family and friends. It is the care all Americans should have, could have and will have if our ideas prevail.

Think about it. There are 900,000 physicians in America. Six hundred thousand of them are sub specialists and their numbers are growing. Three hundred thousand of them are primary care doctors and their numbers are shrinking. It used to be the other way around. When we were children the vast majority of doctors did primary care. Most pre-med students enter college still assume they will do primary care. Why did the outcome change?

Well, one reason is of course that high tech care is much more complex, but that is not the major reason. There is a huge shortage of primary care doctors and a relative glut of sub specialists as we all know. Why does the market not correct this imbalance? The reason is simple. The current third party driven payment systems pay sub-specialists about $400,000 per year for their services while they pay primary care doctors about $150,000 a year for their services. We need to equalize that pay to restore the previous balance that once allowed medical homes to exist all over American. How do we do that? We do it through SIMPD direct practices.

Now, charity for those in need is not optional to us and SIMPD members do more than the average amount of it, but patients who are not in need of charity should take care of their own expenses. That is part of being a free American and it should not be that hard to do. Even with today’s massively inflated, quadrupled prices the average American consumes only $250,000 worth of health care in a lifetime. He consumes $400,000 worth of food.

Furthermore, 20% of patients consume 80% of the care. The healthier eighty percent spend much less, perhaps $50,000 in a lifetime or $100 a month. That is an affordable lifetime expense for most of us. The unaffordable excess risk that infrequently befalls a few of us must be insured. That is what insurance is good at. It is in fact the ONLY thing insurance is good at.

So, can we fix health care? Is there the political will to fix it? Can we defeat the vested interests holding back progress? What criteria should we use to sort through, accept and reject, the various ideas thrown our way?

We need to gradually get people back to buying their own basic care with their own money completely outside the public and private insurance systems. SIMPD will be part of that gradual change. Another part of it is tax free health savings accounts and high deductible personally owned insurance that some of you may already have. Non existent five years ago, today at least six million of Americans use health savings plans. My family does. So do two of my employees. Do yours? Even Medicare now offers such a plan.

We must change health insurance, public and private, so that it covers only expensive chronic disease and catastrophes, not basic care. All but the poorest Americans, who do need a charitable safety net, should buy that basic care through a primary care “direct practice medical home” or through a direct cash practice. With the savings we could easily afford the charity care the poorest Americans need. SIMPD’s goal is to see that day come.

Under our current arrangement primary care medicine is on life support. Most students refuse to enter the field. We must convince 50% of our medical students to enter primary care. Less than 8% went down that path last year. That has to change because primary care is the backbone of medicine. Until we eliminate medical homelessness and make primary care the best kind of practice to enjoy and thrive in as a doctor, nothing else will work very well.

Government does have a role. Insurance, real insurance, once purchased must not be cancelable or up ratable just because of illness. It must be purchased in advance of need. We need strong tax incentives that encourage almost everyone to buy that coverage in advance of need. Creating that playing field is the role of government in a free society. So is encouraging and incentivizing patients to join a direct practice medical home like ours. That is why each of you needs to get involved in organized medicine and politics in your local community. You need to be the voices that stand out and shout our message from the roof tops. And they are beginning to listen to our better idea.

We must means test government programs and promote private charity as better and less costly solutions. Charity care, public or private, must go only to those in real need, and bluntly, most of us and most of our patients do not need other people’s money to pay for routine care.

Health care is different from other critical human needs like food, housing and shelter, which are actually more expensive. Illness is unexpected, confusing, terrifying. It strikes randomly and unevenly. Only recently have we found effective tools to battle and prevent it. We naturally want all humanity to have equal access to those new and effective tools, and in our zeal to accomplish that we forgot that free markets are the best way, the only way, to achieve that goal.

Can we do it? I don’t know. SIMPD has put itself in a position to have a more audible voice in the national debate. Keep the objectives of direct practice primary care medical homes for all paid for directly by the patient, an open transparent market and consumer controlled financing in mind with every action you take. My fear is that health care may crash and burn before the rest of America wakes up and rebuilds it. I hope it is not too late.

We will not solve health care with employer or government based universal first dollar prepaid health plans advocated by some. We will destroy it. Likewise, we must not copy the failed systems of Europe and Canada. We must solve health care in a unique American way.

Winston Churchill said that Americans can be depended upon to do the right thing after trying every other possible alternative first. We have tried or observed the shortcomings of every other possible alternative already. Let us try elevating the individual to his proper role of self reliance when possible, using true charity only when necessary, to care for ourselves optimally, while preserving our national identity.

It is the patient’s health care, but he who pays the piper calls the tune.

Tom LaGrelius, MD, FAAFP

President, Society for Innovative Medical Practice Design

www.simpd.org

Owner, Skypark Preferred Family Care

www.skyparkpfc.com"

End quote

Capitalism for Doctors

2010-01-02T12:23:00.000-08:00

Begin quote:

"Capitalism for Doctors
by Nicholas Provenzo (May 16, 2003)

The following is an excerpt of an address given by CAC Chairman Nicholas Provenzo to the Colorado Medical Society on May 4, 2003.

Ladies and Gentlemen, Good Morning. I thank you for your kind attention this morning and I thank the staff and directors of the Colorado Medical Society for providing me the opportunity to speak with you about the injustice you face under antitrust.

The theme of this weekend's conference is "Physicians are Not Criminals." I applaud you for having the courage to say it, especially face to face with those in our government whose actions against you indicate that they believe all too differently.

I, for one, would like to take the sentiment that physicians are not criminals one step further: I say physicians are heroes. There is a clear correlation between the work of physicians in providing healthcare and the health, comfort, and quality of life of their patients. Your dedication and professionalism has brought good health to our people in a way unprecedented in human history. I believe it is truly a shame that we as a people do not take more time to contemplate the greatness of your professional achievements and the means by which you achieve them.

Yet for all your virtues and the benefits you bring to your patents, you are under attack. As Chris Unrein said yesterday, so powerful and vicious is this attack that one of your own peers was unable to bring himself to speak of it before you this weekend. He said that to talk of it made him more physically ill than he could bear. Truly contemplate that, because such is the nature of the attacks made against you today.

You are told that by exercising your economic self-interest as a group with others in your profession, you represent a coercive threat to your patients that must be prevented by the full weight of the law. You are told that you must justify every increase in fees you seek by proving to someone ignorant of your profession a direct benefit to your patients, as if the continued patronage of your patients was not justification enough. You are warned that if you speak to others about the prices you negotiate, in as innocent a venue as a golf club, or here, this weekend, that act could be held against you in an antitrust proceeding--this in a nation that has enshrined the principle of individual rights, free association and free speech in its most sacred of foundational documents.

So at root, you face a conflict between your rights and the rights of consumers. I hold (and this holding is critical) that in a free market, there is no such conflict. But before this can be made clear, because it is far from self evident, we must go for a little walk that this morning I'll call "Capitalism for Doctors in the Time They Give Me."

When I was in college, I started a summer business that I named "Value for Value Services." I washed windows. Armed with my squeegee and my bucket, "Value for Value Services" was the way that I described my relationship with my customers. I charged as much I believed the market would bear, no matter how badly people needed clean windows, and my customers talked me down as much as they could, no matter how badly I needed the money for school. When we agreed on the exchange, I gave them the value I provided in trade for the monetary value they gave me. Each side could refuse the other, but if an exchange was agreed upon, each side benefited from the transaction. If anyone felt ill used, they only had themselves to blame. Sometimes I made great money washing easy houses, and sometimes I got stuck with a lot more work than I bargained for. And yes, I asked my other window washing buddies what they charged their customers. Over time, I got pretty good judging both the market and the work involved, and I was ultimately able to pay for a year of school with my selfishly sought-after profits.

As I alluded to before, you are in the business of providing the value of health and wellness to your patents. How much do you seek in payment for the services you provide? Your attendance at the conference would seem to say this much: you seek as much as the market will bear and not any less. From my conversations with you, you want a government that respects your right to profit from your work.

Why? Because you know that the pursuit of your economic self-interest is not robbing your patents, or exploiting them--it is simply you exercising your right to the best remuneration you can bargain for in exchange for the services you provide. Profit is not evil. It is nothing more than return on investment after expenses, and the justification for it is nothing less than your right to pursue your own happiness by your own work. I should not have to say to men and women who have endured the rigors of medical school and are dedicated to promoting human life that you have a moral right to profit from your work. Yet as we saw yesterday, when we heard to the government's side of the antitrust debate, that I do.

As much as I oppose the antitrust mission of the Department of Justice, Federal Trade Commission and state antitrust enforcers--as much as they make me physically sick--I'll give the representatives they sent to us yesterday their due. They told us in no uncertain terms what they believed their mandate against you to be. As assistant director Jeffrey Brennan of the FTC indicated yesterday, his mandate, and the mandate of all antitrust enforcers is to protect "consumers."

But what is a consumer, and how are his rights different than those of a producer? Let us define our terms. A producer is someone who creates. He puts his mind to the question of human existence in as many different ways as there are people, and he shapes the materials nature provides him and his own knowledge in a way that benefits human life. You are physician-producers. I produce the value of a rational defense of the principle of individual rights. Others produce homes, entertainment, make cars, raise children, or even serve as sources of spiritual inspiration; so and so on.

Contrast this with a "consumer" A consumer qua consumer (and don't be shocked by this--please hear me out) is a parasite. A consumer consumes, and if we believe that words have meaning, he does nothing else. You wouldn't hesitate a minute to cut out a parasite if it threatened the life of one of your patents. I do not hesitate to cut out a parasite when it threatens you.

I hold that everyone in the free market is a producer, or someone who has the fruits of someone else's productivity bestowed upon him. Accordingly, I hold that to understand the principle that animates the free market, it is inappropriate to look at the people in the market as either producers or consumers. I'm not a producer from 9 to 5 and a consumer the rest of the day. Neither are you. We are all producers who seek trade with other producers on mutually agreed upon terms, to mutual advantage.

Understanding that the market is made up of producers--that is, Bill Gates, you, me, your patients, and anyone else who is productive--will help us as we now define the rights of producers.

The proper principle to guide all economic and political relationships is the principle of individual rights. And to you, I say this: In the field of economic relationships, the principle of individual rights is as important to us all as the scientific method is important in your work as doctors. And just as their are charlatans in medicine who claim that the horn of a rhinoceros is a good cure for disease, there are charlatans in the law that claim that antitrust is good for the free market.

Yet I hold that the principle of individual rights says this: We have a right to our life, and the right to take the action necessary to advance it. We have a right to our individual freedom, which means that we as individuals have the right to take the steps necessary to secure our own ends, unshackled by the whims of others. When producers come together to form a market (because there could never be a market of true consumers), we all meet as free and equals entities, whether we meet as individuals, as a labor union negotiating with a multi-national corporation, or any other such combination or so-called "conspiracy." Whatever our size or numbers, we meet as traders, and each of us has a right to pursue his own self-interest, even if it results in higher prices, or no trade at all. "Restraint of Trade" implies a right to trade. Yet no one has a right to the unearned.

Yet it is the unearned the government antitrust enforces seek in the name of the rights of "consumers." Now drawing back to the question that faces us this weekend, we must ask, as far as a true consumer goes, by what right does the productive efforts of others fall to him?

Under the antitrust laws, their need is sufficient right alone. Under antitrust, we do not have individual rights, but consumers' rights. And that is why, while assistant director Brennan was flying on a plane so he could tell you that he is "here to help" by enforcing the federal antitrust laws, the regulatory agency he works for announced that it was breaking up an association of doctors in New Mexico for having had the audacity to negotiate as a group with a government-created monopsony affectionately known as an HMO.

What assistant director Brennan truly provides is "charity" for consumers, of the government mandated kind. His agency demands that doctors accept less payment for their services than they would accept if they were free to do something as simple as talk to their peers. Add a host of other businesses and professions under their yoke--from Microsoft to ice cream manufacturers to computer chip makers--and you have modem day antitrust enforcement.

But notice that the antitrust enforcers are never honest enough to refer to themselves "charity enforcers." Instead, they make the oft-repeated and lofty claim that they are "protecting competition," a value they have determined to be the "bedrock of our economy" as we were told yesterday.

Yet contrary to popular misperception, competition is not the bedrock of our economy, but only an after product of the free market. In a free market, producers trade with one another by voluntary means. A businessman associates with whomever he chooses, shares information with whomever he chooses, "colludes" with whomever he chooses, and no one has a right to question otherwise. All that said, he still can not evade the fact even the prospect of potential competition and substitutes compels him to check his prices--and those businessmen that fail to do so lose ultimately economic power. Market power can only sustained by those businessmen who effectively supply their customers with goods and services, not those who act against them.

The only institution in America that can truly restrain competition in a way that threatens us is an institution not of economic power, but of political power. Only the government, the same people who brought us the US Postal Service, can outlaw competition. And as Andy Dolan adroitly recognized yesterday, when the government created Medicare, it created a powerful price signalizing institution that the other powerful government-created institutions, the HMO's, have slavishly followed. You doctors seek nothing more than to negotiate with these government-created HMO's on equal terms, and for this, the government has sent its antitrust dogs upon you.

You do not deserve this. It is said we need to educate the Bureau of Competition about the problems doctors face. I say, (and I say this knowing all the political hurdles such an endeavor must overcome): we instead need to abolish the Bureau of Competition and the FTC. It's no longer time to see how we can fit within their system--we need to free ourselves from their system outright. We need to starve it of its funding. We need to take away its legislative mandate and kill it. Millions for defense--but not one cent in tribute. We need to affirm once and for all that producers have rights, and free, unfettered markets are the only means by which these rights are truly protected. Let the government regulators get physically ill over their government-granted livelihoods being taken away from them, but not one more doctor.

Now I want to put my remarks in some context. I wager that what I say to you today in your defense will be more controversial among many of your peers that what those who regulate your lives with impunity said yesterday. I deliberately name my principles up-front because this is the stage we are at in defending the rights of producers against the attacks made against them. When I accepted this invitation, I asked myself what is the most important thing you as victims of antitrust do not know about the assault waged against you. It is not technical minutia--as much as that has its place. It is the fundamental principles that drive antitrust, and the antidote against them. That is your doctor's tool kit. If I was only able to convey this to you in the most limited sense, you are infinitely better armed that you were before.

The founder's application of the principle of individual rights to America created the greatest nation in the history of humankind. As the recipients of this legacy; we should demand a more perfect application of these principles to our relationships. The great John Hancock, signer of the Declaration of Independence and financier of the revolution has this Latin phrase engraved on his tombstone: "Obsta Principiis" --"Resist the first encroachments." Antitrust has been around for 113 years. It is not too early to start resisting this unjust encroachment.

Nicholas Provenzo is founder and Chairman of the Center for the Advancement of Capitalism."

end of quote

Health Care Reform - where we are now

2010-01-02T10:09:00.000-08:00

I am reproducing a letter by Dr. Thomas Lagrelius, which I received today. It represents what I think of our present state of health care reform, I could not have said it better. I may add that the most important two issues of Health Care reform for me personally have NOT been addressed in this reform.

My absolute "must include" reform issues are

1. Tort reform. We should have something analogous to "Workman's Comp". It could be named "Patient's Comp". Patients who suffer an injury during medical care would apply, be examined by an expert committee and compensated according to preset tables. Fair, fast and feasible. Why? Defensive medicine costs 100-200 billions (yes, with a B) each year! Want to reduce costs? Start here.

2. Balance Billing for physicians everywhere for all patients. Not for hospitals. This is the only way physicians will be able to survive the downgrading of our income that seems to an obligatory part or at least result of any kind of "reform". We are independent professional, we have worked very hard to get where we are, we have paid our dues, and we most definitely have earned the right to bill what we consider adequate for our time and experience. We need balance billing. And until then, I recommend to opt out of any contract that does not allow you this basic professional freedom.

Here is the copy of the letter. Emphasis was added by me.

Begin quote:

"Dear Hal:

You are correct about it being far from over! There is still a chance that some Senator will balk after getting an ear full from his constituents over the holiday break so we should keep the pressure up on them.

Even if it passes, this is my take. The single payer advocate Left in Congress built a straw man, the insurance company based guaranteed issue, community rated, insurance exchange thing with all kinds of rules and regs knowing it would be very expensive and entirely unworkable, and intentionally so. They expected to have the "public option" also in the bill. They rightly assumed that straw man would collapse and all would flow into the public option, i.e. "single payer". They got the bill through only by bribing lots of Congress members making Obama, Reid and Pelosi look like the worst smoke filled back room politicians since Mayor Daley or Tammany Hall.

But the Senate screwed them and took out the public option! We can thank Lieberman for that I guess. (I always did like Lieberman and he could still change his mind on the final vote.)

So they are left with the straw man with nothing to default to when it fails.

Everyone knows it sucks. Howard Dean and John McCain both agree for different reasons that the bill should be scrapped and they should start over again. Sixty percent of Americans don't like it while only 30% approve of it in the polls. Insurance will now cost much more, at least double, and most of the uninsured will still be uninsured because there are no teeth in the individual insurance mandate and the bill does not include half the uninsured anyway. In the end nobody will bet better care, nobody will save money and nobody will be happy.

And where are the doctors to do primary care on which the whole thing depends? No place. They are quiting. Even the Mayo Clinic is testing opting out of Medicare in some of its locations while direct practice continues to grow exponentially and students shun primary in droves. Taxes will go way up immediately while the "benefits" if there are any won't start for years under the front loading provisions pretending to make it look cost neutral at first. The voters will feel the pain immediately and get nothing out of it now or later.

Thousands of doctors will quit the AMA and seniors will quit AARP in even greater numbers. Current projections are that the Dems will lose this year's congressional election worse than they did in 1994 so the public option is dead along with the Dem. majority. Obama approval rating is now minus 18% down from plus 35% when he took office (strong approval minus strong disapproval on Rasmussen likely voters. Check the graph:

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

What a mess for Obama who sits in the sun in Hawaii looking remote and inept. He is seen as soft on terrorism, ineffective on the economy and inadequate to the job. The bloom is definitely off the Obama rose.

Laws have been repealed in the past before they went into effect. In 1989 the Medicare Catastrophic Coverage Act was repealed in less than one year and before taking effect due to a senior revolt.

http://jhppl.dukejournals.org/cgi/content/abstract/19/4/753

It could happen again. Let's make it happen! We should throw our support behind the non-conflicted organizations that support physician and patient freedom, like Docs 4 Patient Care, SIMPD and AAPS, pull our support from conflicted ones like the AMA and AARP and make it happen for doctors and patients seeking freedom.

Tom LaGrelius, MD, FAAFP"

End of Quote

Letter to my fellow Physicians

2009-12-19T12:23:00.001-08:00

The annual Medicare pay cut, based on the seriously flawed SGR (sustainable growth rate) formula has been a topic of great discussion every year. This year it was part of the discussion of the new health care bill. While most Americans are against a Medicare pay cut for physicians, one prominent House Democrat would prefer to let the Medicare cuts happen. "I'm inclined to do nothing," Rep. Pete Stark, D-Calif., told Congress Daily in December of last year.
"My colleagues, my staff say, 'Oh, dear, the doctors would all drop Medicare.' I don't believe it. I don't believe that doctors are willing to give up half their income."

Well, Mr.Stark, the doctors are going to drop Medicare and more third party payers - and here is the step-to-step plan on how to do it.

Simple Action Plan

We have been working more and more for less and less. We are being suffocated by ever increasing regulations, which usually turn out just to be new tricks to pay us less (e.g P4P). Many primary care colleagues are at the edge of viability of their practices. The demand for physicians is said to go up, some even talk about a "physician shortage", yet, in contrast to the most basic economical rules, our reimbursements continue to go down. We have lost 60-70% of our earning power since the 80's, a unique situation without precedent.

Patients perceive us as "rich", the media portrays us as making a most comfortable living in the top 5% of incomes.

The media also prefer to report on errors and scandals, on our weaknesses and failures rather than medical success.

For politicians we are part of the problem, not part of the solution. We have no friends in politics, since physicians only amount to 1% of voters. Americans in general consider us "rich" and "too expensive" and one congressman mentioned that "all health care problems would be solved if we could just get the doctors to be satisfied with 75,000 a year".

Insurances earn by not paying us or by delaying payments. They have successfully applied salami tactics for 20 years to reduce reimbursements.

The organisation that is meant to represent us, the AMA, has long bought into the status quo, has surrendered in every important issue and keeps busy tweaking minutia. The "solutions" the AMA offers are anemic and pathetic, and they lack the guts to confront the root problems.

We have no friends and we have no allies.

Nobody will help us. If we want change, we will have to do it ourselves. We have to remember that we are the ones with the knowledge, the skills and the expertise! We do not need anyone to diagnose and to treat. Those who have pushed themselves into the patient-physician relationship do not know medicine, and they are only able to harass us, because we have signed contracts allowing them to do so. Without us, they are nothing!

We have to remember that we have signed the contracts that allow them to withhold, deny, restrict, control, demand pre-authorization, delay and defraud us. We can cancel these contracts. And, with the coming "shortage of physicians" there is no better time. We have to remove the control of medicine from the third party payers. And we have to do it ourselves. Fortunately, this is not hard and may even be not just rewarding, but fun.

Here is a simple action plan. The actions complement each other, each strengthens the other. The plan is flexible, you can start wherever you want and you can go as far as you want. Going just a little step is good for you, going far helps your colleagues as well. the more physicians participate, the larger the impact on health care overall will be.

After putting our personal finances in order, we take a close look at our practice and see which third party payers (and yes, that incluides Medicaid and Medicare) are loosing propositions. We gradually, deliberately, smartly drop third party payers based on an economic analysis of our practices. This shrinks the networks of HMOs and reduces their power and market appeal. At the same time we unite into large groups working under one tax ID to bill together and negotiate together ("group practice without walls"). This increases our numbers and direct negotiation power with the remaining HMOs until we drop them too. At the same time we educate our patients about alternatives to HMOs, so that they favor more attractive options of insurance coverage, such as HSA, HRA, cooperatives, individual tax deductible health plans etc. We offer cash services at a very competitive price. We can do this since we would greatly benefit if we received the same amount of money in cash right from the patients - rather than from an HMO that pay us only after a lot of administration hoops, shenanigans, withholds and months of delay. "Carecredit" and other options may make it appealing to the patient. The more patients drop HMOs, the weaker they get. And finally, we talk to our colleagues about these issues to come to common concepts and understandings, to unite us. One of the possible ways to do this is sermo, the physician-only online community founded in Cambridge in 2006.

This is the plan:

1. Get your personal finances in order first

Consider a fee-only financial advisor. Fee-only advisers are paid by the hour and consequently have less of a conflict of interest than advisers who live on commission. Go over your personal finances, make a long term plan and a mid-range plan. Determine how much income you need as a minimum, what kind of drop of income you can afford while you drop HMOs, and for how long. Initially your income may decrease when you drop the low paying plans, although it does not have to.
Secondly, talk to your partner to get his or her agreement. While dropping HMOs may reduce your income initially, this is temporary and it will to a greatly improved quality of life in the long run. It is essential to have the support of your partner during this time.
Consider postponing larger purchases that put you in debt such as a new car, new home etc. Don't fall for the myth that "doctors are rich and can afford luxury". Living above your means will chain you to the third party payers. Limit your luxury purchases and spend wisely in general. Limit your monthly payments (new car, renovation of condo or house etc).

2. Streamline your practice finances

Sit down with your office manager, your accountant and/or your billing service. Write a business plan! The business plan should include your mission is and your financial goals. Write into the plan what you want to earn on a monthly and yearly basis. Look at your overhead. Based on your planned revenue and your overhead you can now calculate what you have to collect, what you have to earn for each visit and what you have to earn for your most common services. Note those figures. This is a standard business process that astonishingly is not done by many physicians.

Now make a spreadsheet with the ten most common procedures or services in your field. List what each third party payer reimburses you for these services. Calculate which payers will allow you to reach your business goal and which payers do not! Plan to drop the payers that do not allow you to reach your business goal! This is a crucial step.

You may also calculate what each third party payer contributes to your overall collections to help you with the decision about which payer to keep and which ones not to keep. Calculate the average payment for each visit from each payer. Consider the number of patients from each payer. Calculate the accounts receivable for each payer - as a fraction of the charges after 30 days and after 60 days. That informs you about their delays and denials, about the hassle and sleaze factor. Decide which third party payer makes no sense economically and also which payer gives you the most hassle.

3. Drop third party payers that threaten your financial viability

A colleague wrote the following: "I started with the lowest paying HMOs. It is a 2 year process. First I stop taking any new patients from that HMO. Then 1 year prior to dropping them, I will send out a letter to the patients with that insurance informing them that I will be dropping that insurance the following Jan. I send out this letter with the labs that I send to them prior to their physicals. They come in for their physical and they have the opportunity to ask me why I am dropping their plan. I inform them. I tell them which plans I will be taking and that they can still see me if they have out of network benefits. I would say that most patients change insurance or continue out of network with me."

Send certified return receipt cancellation letters to those third party payers that drag your practice down. It is likely not feasible to drop all third party payers at the same time. Start small, gain experiences, then drop more. Remember that you are not "abandoning patients", you are merely becoming an "out of network physician". You are supporting HSAs and high deductible insurances. You are moving your practice towards "consumer directed health care" or towards "cash medicine" or towards concierge medicine". Promote HSAs coupled with high deductible health plans (also called catastrophic coverage) to your patients by several means, such as those described in Neil Baum's book. We will talk about this more later.

The following two books are extraordinary useful and well written: "Think Business" by Owen Dahl, $69, a kind of mini-MBA for physicians written by a veteran of medical management, and "Marketing your medical practice" by Neil Baum, $89, a fantastic book by a successful urologist in private practice. And of course there is "Medical Economics" magazine....

Legal disclaimer: Do not coordinate this purely economical plan with your colleagues, since this might be misconstrued as a "conspiracy". In the past acting as a group to flex our muscle or to influence prices was deemed illegal for physicians, since it might "worsen patient access to health care" or "might increase prices" - something that actually never happened. This was ruled "illegal", since obviously the consumer is a higher priority than physician income or influence. This is a hidden compliment and an acknowledgment of our power.

Therefore do not write emails or letter about this using any other terms than "purely economical reasons" and "supporting consumer driven health care" and use only verbal communication in private places. And understand that this is NOT done to fix prices in any way, but to move the health care system to "consumer driven" - a system that offers maximum transparency, and uses market forces to deliver cost effective, affordable, high quality medicine to everybody. Consumer should call the shots and not the insurance, and therefore consumers should holds and control the money and not the insurances. That is why we are moving away from insurances, to empower consumers.
And we are obviously doing this based on purely economical thinking. We "think business", something that we have learned from just those HMOs - remember?

Should anyone threaten, bring up or even hint at us doing something "illegal" or "conspiring", go to the media and show how this person or entity wants to cheat the consumer and wants to prevent the consumer from being in charge! Consumer driven health care is the ultimate democratic health care system and should be supported by everybody! Nobody will dare object to our move in that direction!

Stop taking new patients 2 years prior to dropping the plan because it is often the case that many other doctors are dropping the same plan. You may have a rush of new HMO patients because the panel of that insurance is drying up. It is harder dropping an HMO which is 30% of your practice than 15%.

Inform the patients a year in advance because many insurance plans require the employee or employer to sign up for the following year 6 months or more before the end of the year.

4. Join or create a "Group Practice Without Walls"

This is the solution when you are faced with one or two dominating HMOs in your area holding 40 plus percent market share, which makes it very hard to cancel their contracts. This is a good solution for colleagues who prefer to have someone else handle the business aspects of medicine and for those who prefer to be employed.

Group Practice Without Walls means the physician continues to practice in his/her own facility, yet is part of a group, just not under one roof. The group does marketing, billing and collections, sometimes, but by now means necessary, also staffing and management. All members have the same tax ID. This way a large number of apparently independently practicing physicians can represent themselves as one group, buy and negotiate as one group, with the obvious advantage of using your larger numbers. The laughter of HMOs about you will become a lot softer.

I have seen this work very well in South Florida, by a group of ObGyns, who prefer not to be named.

Joining this group gives an ObGyn reimbursements of about twice Medicare/Medicaid. For example: global fee for prenatal care, delivery and postpartum care yields $1538 from Medicaid, and group members receive about $3000. Same amount of work, probably even a lot less for a Non-Medicaid patient. Much better payment for group members. Members of the group work in their own private offices, with their own staff, own equipment and rooms, own clinical guidelines and decisions, own budget, own finances, own everything. Except: they bill together and negotiate together under one tax ID. They pay 5% of collections for billing. Codes are entered in the practice computer in the same way you enter information for a clearinghouse. Members pay an entrance fee of 25-50,000 for admission to the group and would have to pay an equal fee in case they left.

The group management will negotiate with the remaining HMOs and routinely fire the lowest paying third party payer. Expect reimbursements of 150 to 200% Medicare. These groups can be set up so that your practice is an LLC within the LLC of the mega group. Billing goes through one single entity, you can pool labs and technical services such as Xray, mammography, ultrasound, bone density, but also cosmetic services, such as botox, epilation, vein therapy etc

How do you set it up? You first spread the word among the best doctors and the key players in the area offering to join you. Then you retain an attorney experienced with formation of such as group. this is expensive, but worth it in the end. You must stand up to anti-trust scrutiny. Your ultimate goal is to attract enough doctors to reach enough critical to have negotiating power, but not as many to violate anti-trust laws. Consider staying under 50% of physicians in your specialty in the area. This may take several years, but is well worth it.

5. Get support from your patients

The transition towards consumer driven health care (and away from HMOs and third party payers) will be much easier with patient support. There is a profound lack of knowledge about consumer driven health care, high deductible insurance plans (HDHP) and Health Savings Accounts (HSA). Once we help our patients understand these issues, they will help us in the transition to more economic and more responsible care!

Learn: buy a HSA/HDHP for your own employees and your family. Browse the most educational and easiest to understand websites on HSAs. Summarize the info into a one half page note. Post this in your office, hand out leaflets to your patients, leave them in your waiting room, post it on your website, in your monthly newsletter, email it to friends and colleagues, drop in mailboxes of other docs in your hospital. Ask your hospital HR to offer them, give a talk at the hospital and at the local chamber of commerce. Write a blog. Create a Google Alert on "HSA". Read and lay out Regina Herzlinger's book "Who killed health care" in your waiting room.

Teach: Educate your patients that they might save 30-40% of coverage costs, that HSAs are funded with pre-tax dollars, that they own those dollars, that they roll over to the next year and may collect interest! Even Medicare has Medical Savings Accounts available during the current enrollment. A huge benefit -it eliminates the need for MediGap coverage. HSAs teach the patient accountability and are the only solution to ever increasing health care costs.

Act: Offer cash services for your patients with HSAs! Patients need to know what to do with their HSAs!! Post a list of prices for your 10-20 most common services. You could even post a comparison list with the prices of a local plumber, electrician etc for comparison - an eye-opener!

Direct patients to the cheaper HDHP providers that actually save money. Traditional HMOs may price these plans so that they become less attractive. Tell your patients that every bank can administer a HSA.

Links: AMA brochure... http://www.ama-assn.org/ama1/pub/upload/mm/363/hsabrochure.pdf
and http://www.ama-assn.org/ama1/pub/upload/mm/372/i-05cmsreport3.pdf
US Treasury Dept...http://www.ustreas.gov/offices/public-affairs/hsa/

Consumers for Health Care Choices is a national membership organization, chaired by a former president of the American Medical Association. http://www.chcchoices.org /Greg Scanlen, greg@chcchoices.org, tel:301-606-7364

Politicians, blissfully unaware of true details of healthcare, may claim that consumers actually do not know enough about and are "not smart enough" and not "educated enough" and "too weak" or "need protection" from all the other players in health care - and that of course, the "government knows best" and has only the best intentions and the best advice for consumers.

"Hi, I am from the government and I am here to help you"

A well designed HSA can save 30-40% on total coverage costs, including the HSA contribution. Further, this contribution is not lost, but owned by the individual, is rolled over into the next year and may collect interest. For the 80+% of us who are basically healthy, HSAs are a great deal. For those that are chronically ill, it is a wash. Employers like HSAs because they save money for the employer. HSAs have proven to decrease costs. Taking all risk away from the patient leads to overuse of resources because it is a lot easier to spend the insurer's money than your own money.

The vast majority of transactions can occur with a debit or credit card at point of sale, no need to file a claim.
Currently, pre-tax HSA dollars can be spent according to IRS section 213(d) which defines healthcare broadly as anything therapeutic, including "alternative medicine" or chiropractic care, while cosmetic surgery is not an "allowable expense"

The opposition to HSAs takes several forms:
1. Only the well-off can afford them
2. People with HSAs will see them as just another investment scheme, and will avoid needed medical care (including essential screening) to "save" this retirement money.
3. We have 4 or 5 generations of consumers / patients in the US who don't have a clue how much their insurance / Medicare is really paying, and will be shocked back to the old ways when they get their bills.
4. Unless they are combined with a cash-for-care schedule of lower payments (less hassle, less paperwork, lower charge) there is not much advantage to having an HSA.
HSAs would actually work great in a "health care cooperative", where physicians AND their patients unite and truly work together to combat their common enemy, disease.
Big opposition will come from HMOs, since they have the most to loose. Pharma is lobbying for a "carve out" of drug costs from the HSA dollars. If patients know the actual cost of drugs, they will prefer generics and "Direct to consumer advertising" will tank.

Unfortunately, most physicians are not offering cash services. We all should post a list of our services for cash payers - independent to the fact if we take HMOs and or Medicare / Medicaid etc. Just good business sense. You inform the patient, you give them an option and you get them thinking in the right direction.....hm, this is what it costs....with all the ramifications, such as why is my insurance so expensive or so cheap, could I afford this on my own without insurance? and so on

Educate your patients about alternatives to insurance, mention HSAs and high deductible plans. The AMA has a leaflet on this.

Patients often think that we receive all the money they pay to their insurance. They assume we make millions. It often is an eye-opener that we receive about the same amount the HMOs keep for their administration (withholding and denying) and they are often very surprised to find out how little we get paid for services. It is incredible effective to create a list comparing our services point by point with with that of a electrician and plumber - and you will find that they come out ahead. This creates sympathy from the patients and the willingness to drop HMOs

6. Get support from your colleagues

Previously we had recommended to put your own finances in order to be able to survive for a while with less income, then approach your practice from a business point of view: first establish how much you want to earn, calculate what each payer has to pay for your most common services and then drop those HMOs that do not meet your business needs. When Jack Welsh was CEO of GE her routinely dropped the two least profitable lines of business. Do the same with third party payers. This is plain economic thinking, and obviously not a plan to boycott third party payers. Start or join a group practice without walls. Encourage patients to enroll in HDHP / HSAs instead of conventional HMOs. This saves our patients money, allows them to accrue savings tax free, while paving the road for cash practice for us.

The last component is to spread the word to as many physicians as possible! Encourage your colleagues to join Sermo, to join our discussion. This way we can learn form each other how to save the health care system. Let them participate and contribute to our discussions. Keep talking about health care reform, stay in touch, write a blog, read about the issue, email a summary of the plan to friends and colleagues, drop a flyer in mailboxes of your colleagues at the hospital. Just invite them to Sermo, the rest will follow!

Follow the plan for yourself and it will be very helpful. Tell your colleagues about it, spread the word and the effect will multiply

Letter from 240,000 physicians to Senator Reid opposing the legislation as currently written

2009-12-06T13:11:00.000-08:00

240,000 doctors from 19 organizations have sent this letter to Senator Reid stating they "oppose the legislation as currently written." This is a letter that provides an appropriate answer and not the too-soft-to-be-effective approach of the AMA. Needless to say that the AMA does not represent me! And as far as I know, the AMA does NOT represent the majority of physicians!

Here is a copy of a letter by Dr. Palmisano to Senator Reid. I support the opinion expressed in this letter, it represents my feelings very accurately.

Start of letter of Dr. Palmisano:

Lots of different opinions exist and if one takes this collection of doctors plus the Coalition of State and Specialty Societies led by MAG plus the Coalition to Protect Patients' Rights, one has a large number of physicians opposing the current legislation as written. So when Washington, DC says trust the doctors and doctors favor the reform as written, remind them of the "rest of the story."

Imagine a simple bill of about 20 pages containing individual ownership of health insurance policies, tax credits to help those who buy their own insurance rather than being job-locked, proven medical liability reform, the right to privately contract for patients and physicians without penalty, convert current Medicaid to a voucher system and give those patients the same rights as senators and representatives, namely the right to pick insurance from an array of choices and periodically change the policy if needed. Encourage medical saving accounts rather than putting up barriers or trying to eliminate them. Address pre-existing conditions via purchasing exchanges. And yes, allow people to buy health insurance across state lines to ensure real competition.

Wow! That is a plan that will keep doctors in practice, give the patients control of their destiny, and not bankrupt America. If the plans in the House and Senate pass, the system will collapse and in the end the doctors will be blamed for the failure. Count on it.
Meanwhile, here is the letter that went to Senator Reid on behalf of 240,000 doctors.

December 1, 2009

The Honorable Harry Reid
Majority Leader
United States Senate
Washington, D.C. 20510

Dear Leader Reid:

On behalf of the over 240,000 surgeons and anesthesiologists we represent and the millions of surgical patients we treat each year, the undersigned 19 organizations strongly support the need for national health care reform and share the Senate’s commitment to make affordable quality health care more accessible to all Americans. As you know, we have been working diligently and in good faith with the Senate during the past year and have provided input at various stages in the process of drafting the Senate’s health care reform bill. To this end, we have reviewed the
Patient Protection and Affordable Care Act of 2009.

As you may recall, on November 4 our coalition sent you a letter outlining a number of serious concerns that needed to be addressed to ensure that any final health
care reform package would be built on a solid foundation in the best interest of our patients. Since those concerns have not been adequately addressed, as detailed below, we must oppose the legislation as currently written.

We oppose:

• Establishment and proposed implementation of an Independent Medicare Advisory Board whose recommendations could become law without congressional action;

• Mandatory participation in a seriously flawed Physician Quality Reporting Initiative (PQRI) program with penalties for non-participation;

• Budget-neutral bonus payments to primary care physicians and rural general surgeons;

• Creation of a budget-neutral value-based payment modifier which CMS does not have the capability to implement and places the provision on an unrealistic and unachievable timeline;

• Requirement that physicians pay an application fee to cover a background check for participation in Medicare despite already being obligated to meet considerable
requirements of training, licensure, and board certification;

• Relying solely on the limited recommendations of the United States Preventive Services Task Force (USPSTF) in determining a minimum coverage standard for
preventive services and associated cost-sharing protections;

• The so-called “non-discrimination in health care” provision that would create patient confusion over greatly differing levels of education, skills and training among health care professionals while inappropriately interjecting civil rights concepts into state scope of practice laws;

• The absence of a permanent fix to Medicare’s broken physician payment system and any meaningful proven medical liability reforms; and

• The last-minute addition of the excise tax on elective cosmetic medical procedures. This tax discriminates against women and the middle class. Experience at the state level has demonstrated that it is a failed policy which will not result in the projected revenue. Furthermore, this provision is arbitrary, difficult to administer, unfairly puts the physician in the role of tax collector, and raises
serious patient confidentiality issues.

This bill goes a long way towards realizing the goal of expanding health insurance coverage and takes important steps to improve quality and explore innovative systems for health care delivery. Despite serious concerns, there are several provisions in the Patient Protection and Affordable Care Act of 2009 that the surgical community supports, strongly believes are in the best interest of the surgical patients, and should be maintained in any final package. Specifically these include: health insurance market reforms, including the elimination of coverage denials based on preexisting medical conditions and guaranteed availability and renewability of health insurance coverage; strengthening patient access to emergency and trauma care by ensuring the survival of trauma centers, developing regionalized systems of care to optimize patient outcomes, and improving emergency care for children; welldesigned
clinical comparative effectiveness research, conducted through an independent institute and not used for determining medical necessity or making coverage and payment decisions or recommendations; and the exclusion of ultrasound from the increase in the utilization rate for calculating the payment for imaging services.

Further, while redistribution of unused residency positions to general surgery is a positive step in addressing the predicted shortage in the surgical workforce, we
believe that the Senate should look more broadly at the issue of limits on residency positions for all specialties that work in the surgical setting that are also facing severe workforce problems.

Finally, we are pleased that you have accepted our suggestion and removed language which would reduce payments to physicians who are found to have the highest
utilization of resources - without regard to the acuity of the patient’s physical condition or the complexity of the care being provided. We thank you for making this important change.

While we must oppose the Patient Protection and Affordable Care Act as currently written, the surgical coalition is committed to the passage of meaningful and comprehensive health care reform that is in the best interest of our patients. We are committed to working with you to make critical changes that are vital to ensuring that this legislation is based on sound policy, and that it will have a long-term positive impact on patient access to safe and effective high-quality
surgical care.

Sincerely,

American Academy of Facial Plastic and Reconstructive Surgery
American Academy of Otolaryngology-Head and Neck Surgery
American Association of Neurological Surgeons
American Association of Orthopaedic Surgeons
American College of Obstetricians and Gynecologists
American College of Osteopathic Surgeons
American College of Surgeons
American Osteopathic Academy of Orthopedics
American Society of Anesthesiologists
American Society of Breast Surgeons
American Society of Cataract and Refractive Surgery
American Society of Colon and Rectal Surgeons
American Society for Metabolic & Bariatric Surgery
American Society of Plastic Surgeons
American Urological Association
Congress of Neurological Surgeons
Society for Vascular Surgery
Society of American Gastrointestinal and Endoscopic Surgeons
Society of Gynecologic Oncologists
cc: United States Senate

Stay well,
Donald

Donald J. Palmisano, MD, JD
Intrepid Resources® / The Medical Risk Manager Company
5000 West Esplanade Ave., #432
Metairie, Louisiana USA 70006
504-455-5895 office
504-455-9392 fax
312-560-0180 cell
DJP@intrepidresources.com
www.intrepidresources.com
www.onleadership.us

This DJP Update goes to 2156 leaders in Medicine representing all of
the State Medical Associations and over 100 Specialty Societies plus
some other friends.

You can share it with your friends and colleagues and it has the potential to reach
800,000 physicians.

The AMA does not represent physicians

2009-09-08T06:37:00.000-07:00

We physicians should declare that the AMA does NOT speak for us – and that they have the spine of a jellyfish....

The AMA recently had a historic chance of opening their mouths very wide and getting their intentions known. They had the attention of the president and the media and the pundits – and for a brief moment everybody on the health care reform stage was waiting to see what "the doctors" think about Obama’s important reform project. If you negotiate with someone like the US president, you do not open the conversation by saying "We basically agree with you". In that instant, you have lost, you are dead, you are in his pocket and only a side note in the health care debate.

And the AMA blew it, they blew it so magnificently and so terribly that I cannot find words for it. It was horrible....

Here is what they should have said:

”Dear Mr President:
before we even begin to talk about reform,

WE WANT

1. MALPRACTICE REFORM – and we want it our way, for example with health courts or with “Patient’s comp”, an institution analog to Workman’s comp. This will be much more fair than the present lottery system. It will encourage systems reform, it will curb defensive medicine. And that will save the country and the health care system a bold 100-200 billion a year - just what you want.

2. we want GUARANTEED BALANCE BILLING – for all patients, anywhere, all the time. Just like the dentists. Because that is the only way to ensure our financial survival. Then your government can decide to pay peanuts for our work, and we will still be able to find a way to survive.

3. and then, still before we take a look at your bill, we demand COLLECTIVE
BARGAINING for physicians. This seems to run in counter of the previous demand, but it is for all those physicians that agree to accept whatever an insurance company or government decides to pay us for our work. It is the only way they can hold up against the massive pressure of these usually very large and very powerful entities that have been lowering payments to us consistently over the past 20 years.

WE WANT THIS, because WE ARE health care. We are the people who do the work, we are the people who have the knowledge, the skills and the experience. Nobody else has.

When you have allowed us to write the above three points into the bill, we will consider the rest of the bill. And don’t even try to insinuate that we do not have the best interest of patients in mind, that would be despicable rhetoric – we have work for them all day long, it is our dedication, our choice, our profession to have their best interest in mind!

And if you and your party do not agree to this we will say louder than you can imagine that we are opposed to your plans, and we will not cooperate, in no way. We will continue to trumpet this into the world, no matter what happens. And we are not only the heart and core of health care, we talk to patients, to everybody, every day, all day long”

Now, that would have been a message! Not a meek rearranging of priorities of the points in Obama’s reform list.

I am not blind enough to think that these demands will go through. But you have to bring them up, you have to shout them out, you have to stand up for your concerns and your needs! Only then can you pester the other side with "well, you did not agree to 1 nor to 2 nor to 3 etc....so now you have to....."

The AMA does not even know the 101 of negotiating. What the AMA did was to lower their heads and demurely convey "oh, our demands will not go anywhere anyway, we may just throw the towel right away". Predictably the president filed the AMA away as “done deal, they are on my side”. Check.

We should be- and we are - selfless and always place patients first when in the office. But in politics we also have a few needs of our own. Representing those needs requires more than the AMA can see, can muster, can wrap their minds and their inner strength around and definitely more than what they can do.

The AMA missed, again, a historic opportunity to represent the interests of physicians. If they represent anything at all, it is certainly not physicians…..

AMA, if you have NO GUTS - and NO STREET SMARTS - then you should at least have the decency not to pretend to "represent" physicians.

Go home, AMA! You are not representing me!

The Physician' s Appeal

2009-09-01T14:51:00.001-07:00

The Physicians' Appeal, written by the The Sermo Team - of Sermo.com

To the American People,

We, the physicians of this country want to reform health care and improve the quality and access to care for our patients while reducing costs. True health care reform will only succeed if:

1. Unnecessary tests and procedures are reduced through tort and malpractice reform

2. Doctors are allowed to spend more time with their patients and less time on paperwork by streamlining billing and making pricing more transparent (create an alternative to CPT codes)

3. Medical decisions are made by physicians and their patients, not insurance company administrators

4. Adequate supply of qualified physicians is assured by revising the methods used to calculate reimbursements.

We invite policy makers to work directly with the men and women who are on the frontlines of health care each and every day caring for the citizens of this country.

We pledge to be partners in true health care reform, improving the health care delivery system in this country while honoring the Hippocratic oath that we all have taken.

Respectfully Yours,

America's Physicians.

A Few Words to Our Patients

2009-09-01T14:28:00.000-07:00

This is a letter that I recently received from Dr. Cameron Schaeffer, pediatric urologist in Lexington, Kentucky. It stands out due to its clarity and creativity. I very much agree with him!

Begin quote:

We, the undersigned physicians of this community, are concerned that expansion of the role of the Government in our nation’s health care system will significantly harm our nation, our profession, and our ability to care for you. We fear that we are on a path well-traveled by other nations and with a destination so predictable that the journey need not be repeated. Despite its faults, America still has the best health care system in the world as evidence by the hundreds of thousands of people who flock to this country every year for training and care; for critics to claim otherwise for political gain and without scrutiny is unconscionable.

We adhere to the following:

Privacy: Third party involvement in the doctor patient relationship is a fundamental violation of patient privacy and our Hippocratic Oath. Personal health information of the most sensitive nature already resides in the vast databases of insurance companies and governmental agencies. A centerpiece of proposed Government health care reform is the expansion of these databases, which are NEVER secure. We do not want your most personal secrets to leave our offices without your explicit permission.

Freedom: This Nation and its economy were founded on the right of independent parties to contract freely for goods and services in a competitive market, and this includes doctors and patients. Free markets lower costs and improve services. Goods and services are exchanged based on price, and prices for health-related services should be negotiated in advance of illness by insurance companies on behalf of their clients or by patients contracting directly with doctors and hospitals. Government price schedules have no market basis and often do not adequately cover physician costs, which is why many doctors do not accept Medicare and Medicaid. For markets to function properly, people must understand what they are exchanging. Our health care system woefully lacks transparency in price, cost, reimbursement, and quality of the services provided at every level. Reforms should empower all parties in the health care economy to contract freely, intelligently, transparently, and in good faith. Your freedom to determine what happens to your body must not be abridged.

Cost: The costs of Medicare and Medicaid are already staggering and unsustainable, and the Congressional Budget Office has stated that additional programs will incur more debt. Our debts, mostly carried by foreign countries, must be paid by our children or by devaluing the dollar. This course threatens our economy and our future as a Nation. Our health care system is based on, and our tax laws promote, third party payment schemes which are inherently inflationary because the patient and his doctor are incentivized to consume. Until we are incentivized to shop wisely as individual consumers caring for our own bodies, the problem will continue. As long as third parties, i.e. the Government an insurance companies, are paying the bills, they are incentivized to limit and to ration care.

Insurance Reform: We need fundamental insurance reform in this country. We can start by making health insurance about insuring risk of serious injury or illness, not a prepayment scheme for every sniffle. We have auto insurance for accidents, not oil changes. New private risk pools for individuals and not-for-profit insurance companies would enhance competition, i.e. improve services and lower costs. If insurance companies are required to accept all applicants, including those with preexisting conditions, they will create larger risk pools to manage the risk. The Government should not be allowed to “compete” because it is impossible to compete against an entity that prints money, does not have to collect premiums, does not have wellness programs, and does not pay taxes. Patients should be allowed to purchase health insurance across state lines like everything else that is sold in this country, and it should be tax-deductible. They should buy it as individuals for life, like life insurance, which makes it guaranteed, portable, and not subject to preexisting conditions. Freed of the need to provide health insurance for employees, employers will pay higher wages to stay competitive in the labor marketplace. Insurance companies need to improve transparency in physician contracts and quit playing reimbursement games with doctors.

Caring for the Uninsured: The Government cannot make uninsured patients disappear by passing laws. They are a societal problem. To ask providers to shoulder most of the cost of caring for the uninsured is unfair. The Government should allow providers to deduct the cost of caring for the uninsured from their taxes, like any other act of charity. Rather than create new programs for the uninsured, the Government should create a mechanism to allow immediate enrollment of the uninsured in Medicaid at the point of service. The insurance status and personal financial liability of these patients can be evaluated retroactively by Medicaid.

Malpractice Reform: The cost of medical liability insurance for physicians is high, and the cost of defensive medicine is real and enormous. Ultimately, these costs are paid by all of us. The utter absence of any discussion of malpractice reform in Washington is a disgrace and fundamentally dishonest. We believe that patients should be compensated for economic damages caused by medical malpractice, but we also believe that our legal system is a circus of blackmail and jackpots, disconnected from true medical malpractice and true damages. Furthermore, and cruelly, it takes years for deserving patients to receive compensation, long after they most need it.

Regulatory Burden: Our regulatory burden is onerous both in time and money, and it frequently contributes nothing of material value to you, our patients. We need relief from this burden to better care for you. Any proposed reforms should diminish, not expand, this regulatory burden.

Personal Responsibility: We all have a civic duty to buy health insurance, and those who cannot afford it should be subsidized, perhaps through taxes on unhealthy foods and non-essential purchases. Some people, particularly the young and healthy, choose not to buy health insurance, even when they can afford it. These individuals must be incentivized to buy health insurance to spread the risk.

Wellness: Under our current system, patients have almost no financial incentive to lead healthy lifestyles. Mechanisms to incentivize wellness could be created, and patients who take care of themselves should be rewarded with lower health insurance premiums.

Professionalism: We are professionals, not commodities. Our training required years of dedication, and it came at a great cost, personally and financially. The assets of the businessman reside in his building and its contents; ours reside in our heads and in our hands. They belong to us, not the insurance companies and not the Government. These assets have real value, and we passionately want to use them to heal you when you are sick, on mutually agreeable terms. Any attempt to force us to work for the Government, without our individual consent, is a form of theft, a corruption of our relationship with you, and an assault on our professionalism.

Stand with Us: Send this advertisement to your representatives and tell them that free market principles can work in health care, just as they do in other service industries. Demand that they fix Medicare, Medicaid, and every VA Hospital BEFORE creating any additional programs. Demand removal of distortions in the tax code that promote third party payment and thus health care inflation. Demand the expansion of tax-free medical savings accounts which empower you, the patient, to find good care at a good price. Demand policies that incentivize providers to discuss their results and disclose their pricing. Remind them that “health care” starts with individuals and that all Americans must be incentivized to stay healthy. Tell them that jackpot justice has no place in the compensation of patients who have been injured while receiving medical care, irrespective of the cause of injury. Stand for freedom, dignity, and respect for the individual citizen, and oppose any reforms that might imperil your right to determine what happens to your body.

Signatures:

Contact information for Kentucky Congressmen:

Email: www.webslingers.com/jhoffman/congress-email.html

Jim Bunning 316 Hart Senate OB Washington, DC 20510
Phone: 202/224-4343 Fax: 202/228-1373
Mitch McConnell 361-A Russell Senate OB Washington, DC 20510
Phone: 202/224-2541 Fax: 202/224-2499
Ed Whitfield 2411 Rayburn HOB Washington, DC 20515
Phone: 202/225-3115 Fax: 202/225-3547
Brett Guthrie 510 Cannon HOB Washington, DC 20515
Phone: 202/225-3501 Fax: 202/226-2019
John Yarmuth 435 Cannon HOB Washington, Dc 20515
Phone: 202/225-5401 Fax: 202/225-5776
Geoff Davis 1108 Longworth NOB Washington, DC 20515
Phone: 202/225-3465 Fax: 202/225-0003
Hal Rogers 2406 Rayburn HOB Washington, DC 20515
Phone: 202/225-4601 Fax: 202/225-0940
Ben Chandler 1504 Longworth HOB Washington, Dc 20515
Phone: 202/225-4706 Fax: 202/225-2122

This advertisement was wholly purchased by the physicians listed above, unconnected with any political party or interest group

"Right to Healthcare"

2009-05-08T07:49:00.000-07:00

You have RIGHT to health care, you say?

Sounds good, doesn't it, feels good to demand it, doesn't it? Politicians demand it, "humanity" demands it, "compassion for your fellow citizens" demands it, health care is just...one of those "unalienable rights". Isn't it?

Well, you know, "Health Care" is not an abstract concept, and not just "something". Health care is what I personally do, an individual service from me for you. I requires preparation, a special setting and often help from other people. Health care is why I get up in the morning and why I go to work.

It took me quite a while to be able to give health care, by the way. 15 years of training, with countless sleepless night, plenty of sacrifices, low income for all those years, pressure and hard work.

And you state that you simply are entitled to this, that it is your right?
Did you do something for me? Did you help me get into medical school? Funny, I also did not see you paying for my medical school, and I did not see you paying for my residency training, nor I did not see you staying up at night with me, bringing coffee, holding my hand, nor helping me in any way at all. I passed all the exams quite well all by myself, and I do not remember you helping me to pass them. And now you claim a right to my success?

In short, you did not contribute to my 15 years of training, but now you say that day or night you have a right to my unique knowledge, my unique skills, my expertise, just because....?

Oh, because it is the "human" thing to do, the "compassionate" thing to do? Or is it because there was an "oath" that was written over 2500 years ago, at a time when we had no electricity, no technology, no paper money, an economic system of the most simple and underdeveloped form.....
Come on....

Ok, you say that you have a right to healthcare because it is really important to you and your really need it, you say it is a matter of life and death...
Well, well, don't we all have our needs..
Counting my needs, I would start with food, which is really, really important. Should food not be a right?
Well, go to your farmer, your supermarket or your grocery store and tell them that you have come to claim your right to food!
Let's continue with shelter, housing. Very basic. Just go to the construction company and tell them that you really, really need a house, and that you think housing is a right! Find out how well that goes over..
Next go to the Gap and tell them that you have a right to clothing! Listen carefully to their answer.
Money, well, that is really important. Money is handy, can be traded for a lot of other useful things. Please go to a bank and claim your "right " to money! Watch how pleased they are....
You might also want to call Warren Buffet and tell him you have a right to his expertise and his skills, after all, he is rich enough.....

Oh, I forgot....
Remind me, since you claim a right to MY work, do I actually have a right to YOUR work? NO? Why does this not surprise me?
To be frank, I think it is pretty nervy of you to demand that you have a right to my work!

To sum this up: I am a free individual and I can do with my life and my knowledge and my skills whatever I please. And no, you do not have any kind of "right" to my knowledge, my expertise and my skills. And, No, you do not have a right to my time, be it by day or by night, my past sacrifices, my blood, sweat and tears. No, you do not have a right to it.
Oh, so you don't really want to claim you right from me, you want to claim it from the government? You think "the government should provide health care"?
May I ask how this will happen? Do you expect the town clerk to provide care? The government as such cannot provide healthcare. Physicians provide health care. Should I assume that you want the government to lean on me, to force me to give you what is a "right"? Is that what you want?
You know, in the end it comes down to you, the patient, and me, the physician. Nobody else. That is health care. I do not see how the government matters in this.
And, no I will not give the government a discount. The government does not give me discounts either. And you remain exactly the same patient, regardless if you pay or if the government pays.
Just to be clear, I do not owe the government anything either. Neither does the government have a right to me, to my life, my skills, my expertise and my knowledge. To the government I am just the same as to you: an individual who is independent, to whose efforts and time neither you nor the government has any kind of "right".
We can trade though, at arm's length, and if we come to a mutually beneficial agreement I will be happy to give you my time and skills

Sabotaging health savings accounts

2008-07-05T20:28:00.000-07:00

Herre is a copy from the AAPS website, worth repeating here:
start of quote
"Sabotaging health savings accounts
June 18th, 2008

Nothing probably shows the potential of health savings accounts (HSAs) better than their enemies’ attempts to wreck them. An attempt to load on costly administrative requirements passed the House of Representatives but not the Senate. President Bush had threatened to veto it. Expect it to come back.

H.R. 5719 would have required every HSA transaction to be reviewed and verified as a legitimate medical expense. Currently, such expenditures are subject to an IRS tax audit, and many are made with a debit card that is only useful at a facility providing medical supplies or services.

A Wall Street Journal editorial called it “Health Savings Sabotage,” with a key player being Rep. Pete Stark (D-CA), who views HSAs as a “weapon of mass destruction.” While Democrats, including Barack Obama and Hillary Clinton, decry the high cost of medical care, including insurance overhead, “Mr. Stark and his friends want to impose the same bureaucratic overhead even on spending that consumers do with their own money” (Wall St J 4/19/08).

Cheating is a nonproblem, the editorial stated: “In any case if people cheat on their HSAs, they are only cheating themselves.”

Lobbying for the provision was EvolutionBenefits, which makes software used for “substantiation” of expenses in employer-owned Flexible Spending Accounts. H.R. 5719 would have enabled EvolutionBenefits to charge twice as much for administering HSAs.

“This is a near perfect example of the corruption of Washington,” writes Greg Scandlen. “A powerful member of Congress using his authority to benefit a single company at the expense of millions of consumers and taxpayers” (Consumer Power Report #123, 4/23/08),

“The message is clear,” writes Dan Perrin of the HSA Coalition, “we (the Democrats) think you cannot make your own decisions, so we are going to force you to pay a company to review your decisions and then we will give you access to your own money but only after we decide whether you made the right choice in the first place.”

Since HSAs were created in December 2003, 3.2 million accounts have been opened, covering 4.5 million Americans, one-third of whom were previously uninsured and bought coverage on their own. Thirty-three percent of new users are small businesses that previously had not offered coverage to their employees.

Consulting firm Watson Wyatt found that average health-insurance costs in the last two years rose 3.6% for employers who offered high-deductible accounts, versus 7% for employers who did not (Wall St J 5/1/08).

According to the U.S. Government Accountability Office (GAO), the number of tax filers reporting an HSA tripled between 2004 and 2007 (GAO-08-474R).

“The take-up rate is the fastest of any benefits innovation of our lifetimes, states Greg Scandlen. “Faster than IRAs, 401(k)s, and far faster than HMOs. The only thing that rivals it may be the conversion of HMOs into PPOs in the mid to late 1990s.”

“Which is probably one of the main factors in pushing H.R. 5719,” writes Frank Timmins. “HSAs are a threat to the SP [single payer] crowd. They need to slowly poison this baby before it grows to maturity.”

end of quote

The Car Care Crisis: A Metaphor

2008-07-04T15:46:00.000-07:00

I owe this very good illustration and metaphor to a colleague on Sermo - DoctorCottle. Here is the copy of a recent post of his on my favorite website, sermo.

In the ten years since most automobile insurance companies were either bought out by health insurance carriers or reorganized along the lines of the "third party payer" health insurance model, it has become increasingly obvious that a crisis in car care is looming in the country. In the last twelve months alone, the average monthly cost of car insurance has increased by almost 200%.

"The cost to fill up my tank is outrageous," says New Jersey motorist Alan Duke. "A tank full of gas now costs me a $15 co-pay. Who can afford this?" Duke is not alone in his criticism of an automobile insurance system that costs drivers more and more, yet seems to deliver less and less. "I haven't had the oil changed in my car for almost 500 miles," complains Janice Taylor as she waits in a seemingly endless line at service station in her home town of Sacramento, California. Just a few short years ago, Taylor used to get oil changes two to three times a month, but like an increasing number of Americans, she has experienced repeated frustration with obtaining even basic automotive service.

Motorists are not the only ones affected by the failure of our car care system. "This will get rejected," sighs Eric Rasely, the owner and operator of a service station in Dayton, Ohio as he fills out the paperwork for a prior authorization for a wiper blade change. "It'll get rejected and then the customer will jump all over me because he has to pay out of pocket. And besides, he just had the blades changed last month. They're fine." Rasely has had to hire extra personnel over the last several months just to help him fill out and submit prior authorizations, billing claims, and other paperwork that he says takes up more man-hours than actually servicing cars.

Few would dispute that America's car care system is broken, but there is little agreement on how to fix it. Caraid, the federal automobile service assistance program for low-income motorists implemented five years ago by the President and Congress, has been plagued by skyrocketing costs and poor reimbursement for car service providers, prompting many mechanics and gas station attendants to "opt out" of the system. This has given political ammunition to Democrats whose proposed nationalized car service initiative, based on Canada's universal car care system, was rejected several years ago. While opinion polls show that an increasing number of Americans are receptive to the idea of so-called "socialized car care," concerns about waiting lists for brake jobs and rationing of gasoline, tires, spark plugs, and transmission fluid under the Canadian system have curtailed widespread acceptance of a universal car care system.

One radical solution that a small but growing number of drivers have chosen is returning to the old model of carrying catastrophic car insurance that covers only unlikely but serious and very expensive contingencies such as theft and accidents, paying for routine expenditures out of pocket. "To me it makes sense," says Ryan Smith, an economics major at the University of Alabama, as he pays at the pump with his debit card at one of Birmingham's "cash only" service stations. "Comprehensive car insurance premiums would cost me a lot more than I spend for routine stuff like gas and oil changes. I bet you'll see more and more people doing this sort of thing in the future. It just makes economic sense. Heck, I bet it would even work for healthcare."

Singapore Health System - Responsibility Works

2008-06-09T09:03:00.000-07:00

Healthcare reformers often look to Europe or to Canada for models of change. This might be due to the fact that it is geographically closer and more Americans are familiar with Europe from personal visits, or it may be due to ideological reasons. Most European nations have a more or less socialistic approach to health care systems. In "The American" of May / June 2008, Rowan Callick investigates the city-state of Singapore and finds it may have a prescription for America.

Singapore has eschewed the European government-payer-model of health care with a great deal of success. The reason for Singapore's successful health care system is not government spending, says Callick. Compared to the American system, Singapore keeps it citizens healthier for much less cost per person:

Singapore residents are considerably healthier than Americans, yet pay, per person, about one-fifth of what Americans pay for their healthcare.
In Singapore, the government funds only about one-fourth of total health care costs, while individuals and their employers pay for the rest.
According to the World Health Organization's (WHO) report on global health statistics:

The United States spends 15.4 percent of its GDP on healthcare, while Singapore spends just 3.7 percent.
Singapore's government spends only $381 per capita on health- or one-seventh of what the U.S. government spends.
Life expectancy at birth in the United States is 78 years; in Singapore, it is 82 years (I am including this with the limitation that life expectancy is not a good measure for the quality of a health care system, this is included since the single payer supporters always quote these figures)
The U.S. infant mortality rate is 6.4 deaths per 1,000 live births; in Singapore, is it just 2.3 deaths per 1,000 births.
Now, here is the decisive point:
Singapore's system requires individuals to take responsibility for their own health and for much of their own spending on medical care. The system works so well because it puts decisions in the hands of patients and doctors rather than of government bureaucrats and insurers, says Callick.
Source: Rowan Callick, "The Singapore Model," The American, May/June 2008.

HSAs - common misunderstandings

2008-06-06T09:38:00.000-07:00

The HSAs (health savings accounts) are in my view the best answer that I know to the question: How do you increase people’s responsibility in health care spending in a fair way that balances compassion (giving the sick all they need) and responsibility (discouraging waste and overspending).
One of the main drivers of health care cost is the moral hazard, the fact that we are “shopping with someon else’s credit card” and therefore do not mind at all to spend generously and overspend. Unless you adress the moral hazard, you will never curb the spiraling health care costs. Obviously everybody wants to best, most complete, most modern etc…...This desire leads to cost overruns and it is often not necessary to reach the goal of diagnosis and or treatment.
People only get a bit more selective and cost conscious when they have to pay pat of the bill themselves. Then, and only then, they will ask the question: “Doctor, how can we manage my condition in a cost efficient way” and if their own money is at stake, they will keep an eye on the doctor’s spending.
The only other way is the top-down, one size fits all, anonymously handed down by committee cost reduction through rationing and through making resources simply unavailable - as it is done in single payer systems such as Canada and the UK - with al the disadvanatges that come with it.
The HSAs are a intelligent, balanced and fair way of adressing this problem, my favorite solution so far. I still have not found anything better. That is why HSA deserve publicity.

Here is a quote from John Goodman" excellent Healthcare blog, a comment left by Greg Scandlen, whose website "www.hsaeducator.com" I highly recommend. I could have called this "debunking myths about HSAs" but that expression is so overused...

begin quote:

"Greg Scandlen Says:

May 21st, 2008 at 3:52 pm

The week was not enhanced by the hearing on HSAs held by the Health Subcommittee of the House Ways & means Committee. Chairman Pete Stark (D-CA) has long been contemptuous of HSAs or anything slightly similar. He seems to think that the federal Medicare program is the Nirvana of health care financing - never mind that it has $34 trillion in unfunded liabilities and even then it pays only about half of the average senior’s health expenses.

The witnesses at the hearing included three long-standing opponents of HSAs — Linda Blumberg of the Urban Institute, Judy Waxman of the National Women’s Law Center, and Michael Chernew of the Harvard Medical School. What these folks had to say was boringly predictable and I’m not going to repeat it here. You can go to the Committee’s web site and download their testimony if you are feeling masochistic.

But we responded by submitting a statement that tried to rebut some of the distortions. Part of our statement said –

Most of what you have been told in the testimony to date is either mistaken, based on suppositions or surveys of uninformed people, or simply irrelevant to CDHC. For example –

• You were told that lower-income people cannot afford the out-of-pocket responsibility that comes with an HSA. You were not told how those same people could afford the higher premiums that are required to avoid that cost. In fact, money that is paid to an insurance company for first-dollar coverage is money that is lost forever. Lowering the premium and using that saving to pay directly for services gives the low-income consumer a chance to save money that would otherwise be lost.

• You were told that the tax break associated with HSAs is unprecedented and a boon to the “wealthy.” In fact, the tax treatment of HSAs is precisely the same tax treatment afforded to employer-sponsored health insurance. Premiums are untaxed and benefits are untaxed. It is true that the “wealthy” get a larger tax benefits than the unwealthy, but that is the case for employer-sponsored comprehensive coverage as well as for HSAs. Further, the opportunity to save, say, $2,000 a year that would otherwise go to an insurance company is of far greater benefit to the low-income worker who earns $20,000 a year than to the wealthy executive who makes $200,000, regardless of the tax treatment.

• You were told that “the sick” do not benefit from HSAs because of the higher out-of-pocket responsibility. In fact, both the healthy and the sick have less out-of-pocket exposure with an HSA, a point that was well documented in a recent Health Affairs article. In fact, HSAs limit a patient’s out-of-pocket exposure, something that is not true for the Medicare program, for instance.

• You were told that most health care spending takes place above the deductible associated with an HSA, so they will not have “a significant effect on overall spending.” This is probably true, but irrelevant. HSAs are having a profound effect on lower-cost routine spending and that is significant by itself. Other strategies are needed for high-cost services with or without an HSA.

• You were told that many people with a high-deductible health plan do not open up an HSA. That, too, is true but irrelevant. The HSA itself is attractive for those people who are able to get a tax benefit from passing their direct payments through the account. Other people, especially those who pay no income taxes, may find it more suitable to simply pay cash at the time of services or to keep their funds in some other, non-HSA, account. Further, there is likely to be a lag time between the point of enrollment and opening up that account. This is not a problem.

• You were told that some people who have to pay directly for care or for prescription drugs may fail to do so to save the money. That also may sometimes be true. But there is never any guarantee that people will always fill their prescriptions and take their medications regardless of the financing scheme. In fact, we know that many health conditions are caused or aggravated by patient behavior under all health insurance systems. But, to the extent that people with CDHC are more knowledgeable and more invested in their own care, their compliance will be better than it is for other benefit programs. And that is precisely what we are seeing in the market."

end quote

What Physicians Have In Common and Can Agree On

2008-05-28T06:35:00.000-07:00

A few weeks ago this post on Sermo.com received over 300 votes with an outstanding 95% of "yes" answers.

I see these few points as a declaration of independence of physicians and physicians should read and remember this from time to time.

"What we physicians all have in common"

1. We want to serve our patients, not insurance companies nor the government

2. We want to practice medicine independently according to our knowledge and judgment, and not be told what to do by insurance companies nor by the government

3. We want to make a living on our own, we do not want to be given what insurance companies and government deem "appropriate" for us

We want to be an independent, noble and free profession!

Because WE have the knowledge, the expertise and the skills, and the insurance companies and the government do NOT! "

Time to Nationalize the Educational System

2008-05-26T14:58:00.000-07:00

The following statistics are from the National Institute for Literacy: http://www.nifl.gov/nifl/facts/facts_overview.html

In the International Adult Literacy Survey (IALS) assessment, 1994-98:

The average composite literacy score of native-born adults in the U.S. was 284 (Level 3); the U.S. ranked 10th out of 17 high-income countries;
The average composite literacy score of foreign-born adults in the U.S. was 210 (Level 1); the U.S. ranked 16th out of 17 countries.

In the International Adult Literacy Survey (IALS) assessment, 1994-98:

The mean prose literacy scores of U.S. adults with primary or no education, ranked 14th out of 18 high-income countries;
The mean prose literacy scores of U.S. adults with some high school, but no diploma or GED, ranked 19th out of 19 high-income countries;
The mean prose literacy scores of U.S. adults with a high school diploma or GED (but no college), ranked 18th (tie) out of 19 countries;
The mean prose literacy scores of U.S. adults with 1-3 years of college, ranked 15th out of 19 countries; and
The mean prose literacy scores of U.S. adults with a bachelor's degree or higher, ranked 5th.

end of quote

These statistics show very clearly that we have a literacy crisis on our hands. I believe that literacy is a basic human right! The educational system needs to nationalized! Since we are underperforming the other industrialzied nations, the government needs to take over our education system - immediately!

But, uuuhooooh, wait, wait, the educational system is already nationalized! The government is already running it! So, how come we are not doing that well compared to other industrialized nations? How is this failure possible? I thought that "government run" is a recipe for complete and utter success!

Now, do you still think we ought to nationalize health care? Should we, really?

Stupid Arguments in the Health Care Reform Debate

2008-05-25T15:32:00.001-07:00

This particularly stupid argument about health care reform was repeated by Senator Clinton:
"Markets in Medicine do not work, you cannot shop for a physician when you are having a heart attack...."
Of course not, dear Senator, you are so right. But then, we knew that already.
Nobody expects such a thing. You shop when you are healthy. You compare family physicians in your neighborhood and maybe a little bit beyond. You use the internet with the new tools that bring together basic info about physicians such as training, board certification, specialty, practice profile that includes ages, most common diagnoses, and of course prices for the most common services.
Mind you, these websites do not exist yet in this comprehensive form, but they will come. In addition, you might have journals and magazine such as consumer reports in the future as well.

You shop before something happens, when you are looking for a family physician and then you rely on this family physician for your choice of hospitals and specialists.
Why do anti-free-market advocates pretend that this is not possible?

Let's consider this:
Can you shop for a lawyer while the robber is holding you at gun point?
NO! Uhoh, time to socialize lawyers! Senator Clinton as a lawyer should be intimately acquainted with shopping for lawyers in a free market.
Very strangley indeed - laywers seem to be completely exempt from any talk about "nationalized law care" because "we cannot shop for lawyers when a robber holds us at gunpoint".

Another argument from the single minded is that supposedly there is "not enough information about physicians". Since there is not enough information, we cannot shop and consequently we outgh to nationalize health care. Hello?

Well, there is even less information about lawyers, so, hurry up, let's nationalize lawyers too!
Make an experiment: Next time you see a politician (most of them are lawyers) during a speech, ask him or her to support a bill to nationalize the legal system, so that everybody, truly eerybody has "acccess to law" and so that there is no more "law only for the rich". Now watch how well that goes over! Take the arguments why a nationalized legal system is complete nonsense in the eye of the politician, and, voila! Apply that to medicine.

Medicine is very comparable with law, in the sense that the average person does not understand too much of it's intricacies and details and therefore most people tend to leave it to professionals to guide them. What works fro law, works for medicine.

So, fans of socialized medicine, go on, socialize law - everybody deserves "rights". Is "lawcare" not a constitutional right? Should not the government make sure you and everybody else have equal access to rights, to lawyers etc? What a great field to start, so let's nationalize the legal system! All lawyers paid by the goverment, by fixed rates that are determined by some far away university commission, adn maybe they should be paid "by the case". And, just to make things equal to medicine, they should be forbidden to charge anything more that what the government pays them - ever. And, please institute pay for performance, now that you are at it....

Massachusetts - How Not To Reform Health Care

2008-05-23T06:52:00.000-07:00

Here is an article of the Wall Street Journal that is worth quoting:

start quote
The New Big Dig
May 21, 2008; Page A18

Mitt Romney's presidential run is history, but it looks as if the taxpayers of Massachusetts will be paying for it for years to come. The former Governor had hoped to ride his grand state "universal" health-care reform of 2006 to the White House, but his state's residents are now having to live with what he and the state's Democratic Legislature passed. As the Boston press likes to say, it's "the new Big Dig."

The showpiece of RomneyCare was its individual mandate, a requirement that all Massachusetts residents obtain health insurance by July of last year or else pay penalties. The idea was that getting everyone into the insurance system would eliminate the "free-rider" problem of those who refuse to buy insurance but then go to emergency rooms when they're sick; thus costs would fall. "Will it work? I'm optimistic, but time will tell," Mr. Romney wrote in these pages in 2006.

Well, the returns are rolling in, and the critics look prescient. First, the plan isn't "universal" at all: About 350,000 more people are now insured in Massachusetts since the reform passed. Federal estimates put the prior number of uninsured at more than 657,000, so there was a reduction. But it was not secured through the market reforms that Governor Romney promised. Instead, Massachusetts also created a new state entitlement that is already trembling on the verge of bankruptcy inside of a year.

Some two-thirds of the growth in coverage owes to a low- or no-cost public insurance option. Called Commonwealth Care, it uses a sliding income scale to subsidize coverage for everyone under 300% of the federal poverty level, or about $63,000 for a family of four. Commonwealth Care also accounts for 60% of statewide growth in individual insurance over the last year, and the trend is expected to accelerate, perhaps double.

One lesson here is that while pledging "universal" coverage is easy, the harder problem is paying for it. This year's appropriation for Commonwealth Care was $472 million, but officials have asked for an add-on that will bring it to $625 million. For 2009, Governor Deval Patrick requested $869 million but has already conceded that even that huge figure is too low. Over the coming decade, the expected overruns float in as much as $4 billion over budget. It's too early to tell how much is new coverage or if state programs are displacing private insurance.

The "new Big Dig" moniker refers to the legendary cost overruns when Boston rebuilt its traffic system. Now state legislators are pushing new schemes to offset RomneyCare's runaway expenses, including reductions in state payments to doctors and hospitals, enlarged business penalties, an increase in the state tobacco tax, and more restrictions on drug companies and insurers.

Mr. Romney's fundamental mistake was focusing on making health insurance "universal" without first reforming the private insurance market. The "connector" that was supposed to link individuals to private insurance options has barely been used, as lower-income workers flood to the public option. Meanwhile, low-cost private insurers continue to avoid the state because it imposes multiple and costly mandates on all policies.

Hailed at first as a new national model, the Massachusetts nonmiracle ought to be a warning to Washington. Barack Obama and Hillary Clinton are both proposing versions of RomneyCare on a national scale, with similar promises that covering everyone under a government plan will reduce costs. Mr. Obama at least argues that more people would be covered were insurance more affordable. But his solution is Massachusetts on steroids – make insurance less expensive for policyholders by transferring the extra costs onto the government. Mrs. Clinton likes that but also wants the individual mandate, despite the mediocre results so far.

The real problem in health care is the way the tax code and third-party payment system distort incentives. That's where John McCain has been focusing his reform efforts – because that really does have the potential to reduce costs while covering more of the uninsured – and Republicans ought to follow his lead.

In this respect paradoxically, we can be thankful that Massachusetts ignored the cost problems that doomed other recent liberal health insurance overhauls in California, Pennsylvania, Wisconsin and Illinois. The Bay State is showing everyone how not to reform health care.

end quote

2008-05-22T14:32:00.000-07:00

KENNEDY: WHY WASN’T HE FLOWN TO EUROPE?
Well, I guess it’s up to me to ask the uncouth yet obvious question: If U.S. health care is inferior to the systems of Canada and Europe, why wasn’t a rich and famous man like Senator Kennedy immediately sent to one of those places so that he could get the best care available?

As Whitecoat noted the other day, Kennedy was indeed transferred from Cape Cod Hospital, where he was initially admitted, and airlifted to … Massachusetts General Hospital. Why not Europe? Perhaps the answer lies in this international comparison of cancer survival rates for males:

UK cancer survival rate lowest in Europe
By Nicole Martin
Last Updated: 1:56AM BST 24/08/2007
Cancer survival rates in Britain are among the lowest in Europe, according to the most comprehensive analysis of the issue yet produced.

European cancer survival rates
England is on a par with Poland despite the NHS spending three times more on health care.

Survival rates are based on the number of patients who are alive five years after diagnosis and researchers found that, for women, England was the fifth worst in a league of 22 countries. Scotland came bottom. Cancer experts blamed late diagnosis and long waiting lists.

In total, 52.7pc of women survived for five years after being diagnosed between 2000 and 2002. Only Ireland, Northern Ireland, Scotland, the Czech Republic and Poland did worse. Just 44.8pc of men survived, putting England in the bottom seven countries.

The team, writing in The Lancet Oncology, found that Britain's survival rates for the most common cancers - colorectal, lung, breast and prostate - were substantially behind those in Western Europe. In England, the proportion of women with breast cancer who were alive five years after diagnosis was 77.8pc. Scotland (77.3pc) and Ireland (76.2pc) had a lower rate.

Rates for lung cancer in England were poor, with only 8.4pc of patients surviving - half the rate for Iceland (16.8pc). Only Scotland (8.2pc) and Malta (4.6pc) did worse.

Fewer women in England lived for five years after being diagnosed with cervical cancer (58.6pc) despite a national screening programme. This compared to 70.6pc in Iceland. Dr Franco Berrino, who led the study at the National Cancer Institute in Milan, said cancer care was improving in countries that recorded low survival figures. He added: "If all countries attained the mean survival (57pc) of Norway, Sweden and Finland, about 12pc fewer deaths would occur in the five years after diagnosis."

His co-researcher, Prof Ian Kunkler from the Western General Hospital in Edinburgh, said waiting lists for radiotherapy were partly to blame.

This table is from The Telegraph, which reported the results of a study first published in The Lancet. Despite the mountains of BS piled up by single-payer advocates (including Kennedy himself), it clearly showed that the U.S. health care system outperforms the “superior” systems of Europe.

A couple of weeks ago, John McCain was lambasted for having the audacity to say that U.S. health care was still the best in the world. It would appear that the Kennedy family agrees.

¶ Posted 21 May 2008 † Catron

The Cause of Spiraling Health Care Costs

2008-05-22T09:03:00.000-07:00

A colleague of mine received my email with the “Open Letter” and my comment that I think that the third party payer system is the true root problem of the spiraling cost of health care.

He answered:

“I feel that not only is it the greed of third party payers stifling
our health care choices, the health paradigm itself is failing. The
paradigm allows for patients to abuse their bodies and then hope for a
pill/surgery/procedure to get them up and running again. This taxes
the system and rewards those who can care less about their health. It
does nothing to empower people to live healthier lives.

I completely believe in a system that allows for healthier people to
pay fewer premiums. Less utilization = lower premiums. Stop eating
your cheeseburgers and diet cokes and maybe you'll save $$, let alone
live extra years.

When a patient of mine was allowed to degrade under physical therapy
for 8 straight years under Medicare, and then regain neurological function
under my care in 2.5 months, we have a problem. Not only that,
Medicare then wants to cut him off.

Bullshit, bullshit, bullshit. How about rewarding excellence in
care and in patient behavior? Doesn't happen”

My answer:

The third party payer system does not equal “greed of the third party payers”, not at all, not at all. The third parties will always behave the same way, coming up with anything to save money. It does not matter if the third party payer is a for profit company or a government institution. The behavior will be exactly the same. roof: I have seen all the exact same shenanigans that HMOs do to us here in the US exercised by the government run "sickness fund" in Germany. No difference at all, none, zero. I cannot stress that enough.

The problem is that the people involved in making the decisions to spend the money, parties one and two have no interest whatsoever in saving money. Patients want the best, most expensive, most modern, coolest treatment of the planet and yesterday and will all the creature comforts please. Physicians want to be nice to the patients and want to earn money. The more physicians do, the more they earn....
The problem is that we are "shopping with someone else's credit card" and therefore ready to waste.

As you correctly point out, people do not care about prevention - hey, why should they, if something happens, "it's all covered" anyway, so why worry. Unless it starts to become costly to neglect your body and your health, people will not go for prevention. Anybody who says otherwise is a dreamer and lives in idealistic lalaland....

That is where the solution is:
People have to pay for their health care. Period. Problem solved. There was a large study done by the Ayn Rand foundation in the 70's: one group with an insurance that covers everything- with 5% out of pocket and one group with 50-50% out of pocket and one group where the insurance covers only 5%, and 95% are out of pocket.
What happened: the care for the 95% out of pocket was the least expensive - but they reduced health care consumption indifferently, they reduced consumption of truly needed as well as superfluous tests and treatments.

Every socialist will cry out when hearing this reasoning: "see, people are going to get breast cancer, they are going to neglect their health to save a few dollars, this is immoral, blablabla. Cry, cry...insert tear jerker anecdote here....

My reasoning: at some point in life people have to learn what is important and what is not. You might as well start now, and the earlier the better. In time, people will realize what they really need and what they don't need. Today are not the seventies and with the Internet providing information, it is easy to tell the difference between necessary and superfluous tests.

And: only when a patient asks the physician: "What is the most cost effective way of dealing with this?" and then insist on the right solution, only then will the "unstoppable increase" in health care costs abate...
Your Obgynthoughts

Sermo, the Open Letter and the root of all health care problems

2008-05-21T14:43:00.000-07:00

We physicians need to talk to each other more, we need to use the Internet as a the new and exceedingly useful platform to communicate with each other. With the development of the "Open Letter", Sermo.com has proven that it can be be just that, a platform to stay in touch, and to exchange ideas. And it allows us physicians to talk to each other across speciality lines and across any geographical boundaries, something that is sorely needed.

We physicians need to unite. We are medicine. All the others are outsiders without our knowledge, our expertise and our skils. It is completely unacceptable that health care planning and reform is happening around tables without phsyicians. We have to stop accepting what business people and politicians cook up for health care and then expect us to swallow. We are medicine, we are it. "They" are the mere monkeys on our backs. Without us, they are nothing.

While I agree with most others in terms of the criticism of what is wrong today in health care, I am not in favor of any kind of single payer third party payer system or any other kind of overbearing, strangulating government control. Instituting a socialistic single payer system would competely and sadly miss the root problem in health care: the fact that "we are shopping with someone else's credit card".

That is the true root problem of health care systems in Europe and in the US.

I have the advantage that I grew up in Germany and Spain and now live here in the US. I have trained and practiced in Germany and in the US. I have worked in Europe and I have seen the exact, but absolutely exact same problems and developements in Germany that we see here in the US. Amazing , isn't it? The exact same problems, Now let that sink in. "Socialistic" or "capitalistic" structure of the health care system does not matter. The third party payer system is the problem.
As long as a third party pays the bills, we will encourage waste, as long as a third party pays the bills, we will overspend, as long as a third party pays the bills, costs will continue to rise "unstoppable", as long as a third party pays the bills, it will go downhill.

Stop salivating about universal health care and about the Canadian or Bristish system, stop denying the problems each of them has. Work on replacing the third party payer system with a direct patient - physician relationship. Nothing else, no outside intrusion. Then health care will be free of third party interests, free of abuse by commerce and government and the patient and physician will be in charge again, as it should always have been and as it will be again in a few years

SAME SPENDING, DIFFERENT ACCESS

2008-05-20T10:06:00.000-07:00

Another quote from the Center for Policy Analysis reporting that US Americans have same or better access to drugs at the same cost as Canadians. If you think about it, Walmart with their $4 prescription program is excellent, it shows capitalism in action. Very successful, very cheap.

Here is the quote:

"When it comes to prescription drug policies, governments in the United States tend to be more oriented towards competitive markets while the governments in Canada tend to be more interventionist. There is a common misperception Canadian prescription drug policies tend to produce lower overall costs for consumers than American prescription drug policies. However, a recently published Fraser Institute report shows that the average personal cost burden of prescription drug spending is roughly equivalent in both countries.

For example:

In 2006, the per capita spending on prescription drugs was 1.5 percent of per capita GDP for Canadians and 1.6 percent for Americans.
In the same year, Canadians spent 2.5 percent of their personal disposable income on prescription drugs, while American spent only 2.2 percent.
Also, the number of prescriptions dispensed per capita in both countries was approximately the same, 13 prescriptions per person in Canada compared to 12.3 per person in the United States.
The fact that the personal cost burden of prescription drug spending is roughly the same for Canadians and Americans is partially explained by differences in the prices of patented and generic drugs:

Patented brand name drugs in Canada are on average about 51 percent less expensive than in the United States.
Generic drugs in Canada are about 115 percent more expensive on average than the same generic drugs in the United.
Although Canadians and Americans share approximately the same cost burden for prescription drug spending, Americans are better off because research suggests that U.S. consumers have better access to new innovative drugs than Canadians do. Canadians who rely on public drug programs suffer longer delays to access many new medicines than Americans, and are in many cases not able to access the same number of life-saving and life-improving drugs that are more commonly available to Americans, according to Fraser.

Source: Brian J. Skinner and Mark Rovere, "Same Spending, Different Access," Fraser Forum, March 2008.

For text:

http://www.fraserinstitute.org/COMMERCE.WEB/product_files/FraserForumMarch2008.pdf

For more on Health Issues:

http://www.ncpa.org/sub/dpd/index.php?Article_Category=16
"
end of quote

LONG WAITS FOR HEALTH CARE ARE COSTING CANADIANS BILLIONS

2008-05-20T10:00:00.000-07:00

A bit of fresh air for the fans of single payer health care systems:, a quote from the national center for Policy Analysis:

Start quote...
"Excessive waits for health care services endured by Canadian patients have imposed huge costs on the nation's citizens according to a study from the Centre for Spatial Economics.

Other major findings:

The study of medical wait times in all 10 of Canada's provinces found excessive delays for four key procedures--total joint replacement surgery, cataract surgery, coronary artery bypass graft surgery, and magnetic resonance imaging (MRI) scans--cost the nation an estimated $14.8 billion in 2007.
This in turn lowered federal and provincial government revenues by a total of $4.4 billion, the report noted.
However, it is individuals who bear these costs. When the government controls all of health care, it looks for ways to save money, and the easiest way to save is to deny care or ration care through long waits, says Charles M. Arlinghaus, president of the Josiah Bartlett Center for Public Policy.

Rationing care by using waiting lists puts a heavy strain on an economy by incurring high costs through reduced worker productivity, says Devon Herrick, a senior fellow at the National Center for Policy Analysis. Canadian Medicare uses rationing by waiting because the cost of lost productivity is borne by the individual and employer, whereas the cost of actually providing needed care falls on the public system.

For example:

Excessive waiting for total joint replacement surgery was the most expensive byproduct of Canada's health care rationing, at nearly $26,400 per patient.
That was followed closely by MRIs ($20,000), coronary artery bypass graft surgery ($19,400), and cataract surgery ($2,900).
Herrick disagrees with the study's policy prescription, saying private care options would be more effective than increased government investment in the system.

"Canadians should be allowed to pay for care privately if they so choose. It is unconscionable to forbid patients from paying for care the public system cannot provide them in a timely manner," he says.

Source: Sanjit Bagchi, "Long Waits for Health Care Are Costing Canadians Billions of Dollars," Health Care News, June 1, 2008.

For text:

http://www.heartland.org/Article.cfm?artId=23229

For study:

http://www.c4se.com/

For more on Health Issues:

http://www.ncpa.org/sub/dpd/index.php?Article_Category=16
" end of quote

Open Letter from the American Physicians

2008-05-12T20:43:00.000-07:00

Sign the Open Letter from America's Physicians

The time has come for physicians to come together and lead a new wave of healthcare reform. The current healthcare system is strained and unsustainable. Our patients' well-being and the dignity of our profession are at stake. The physician community has found a powerful voice on Sermo and we can use this platform to speak with consensus and act in unity.

On Sermo, the physician community has been able to start formulating strategies to refocus our misdirected healthcare system for optimal patient care. The first product of this effort is the launch of an open letter to the American public, outlining the challenges we face in delivering appropriate care. This letter also gives us the opportunity to declare our full commitment to our patients. What began with the idea of drafting a single letter has now grown into a movement that is unifying and giving voice to thousands of physicians.

The "Open Letter from America's Physicians" is the culmination of months of polling, discussions, and draft revisions on Sermo, involving the active participation of over a thousand physicians. We must now drive our colleagues to sign the letter to show the strength and scope of our unity to policy makers and the public. Sermo has pledged support to distribute the signed letter broadly via the Internet, national newspapers, and downloadable materials that we can share with our patients. These strategies will give us national visibility and generate significant media attention for our efforts.

We have finally been given a real opportunity to speak and act as one. There is power in our unity. We can build on this experience and create a viable mechanism for establishing a new paradigm that acknowledges the value of physician autonomy and patient-centered health care delivery, free from the intrusion of special interests and political motives.

................................

An Open Letter from America's Physicians

Dear Fellow Americans,

For decades the United States has led the world in healthcare. We have enjoyed the finest hospitals, medical schools, research, technology, and resources. Unfortunately, our healthcare system has lost focus to the point where patient well-being is placed after politics, profits, and special interests. Healthcare costs are on the rise and patients have lost their freedom of choice. These trends are hurting our economy and compromising the doctor-patient relationship. As a result, it has become difficult for physicians to deliver the best possible care.

Our heavily fragmented healthcare system has made it very difficult for you, the American public, to get the care you need. As your physicians, we want to partner with you to address the critical defects of the system as outlined below:

You are paying a lot for healthcare and not receiving enough in return. Your insurance premiums continue to increase while your healthcare options are dwindling. Gatekeepers, insurance networks, and restrictive regulations limit your choice of doctors and your access to care.
You have been made dependent on complicated and expensive health insurance plans. Employers are forced to take money out of your paycheck to purchase health coverage. If you lose your job, you are left with no safety net and the money you have paid for health coverage vanishes.
The time you spend with your physician has become remarkably brief due to regulatory hurdles requiring doctors to spend more time on documentation than with you.
We believe the following factors have made our current healthcare system unsustainable:

The insurance industry's undue authority and oppressive control over healthcare processes
Excessive and misguided government regulation
The practice of defensive medicine in response to a harmful and costly legal environment

We, the physicians of the United States, will no longer remain silent. We will not tolerate a healthcare system where those without medical expertise or genuine interest in our patients' health have absolute control. This letter is merely a summary of the most important problems in our current system. We believe that by partnering with the public we can start to demand real change and formulate practical solutions.

We invite you, our patients, friends, neighbors, and employers to unite with us at this important time in the history of healthcare in the United States. Together, we can guarantee our nation a healthier tomorrow.

Please talk to your doctor about this letter and visit http://www.sermo.com/doctor... for more information.

Respectfully,

The Undersigned U.S. Physicians

................................

What can you do?

SIGN the letter here through your vote and add your voice to this nationwide call to patients.

SEND emails to colleagues and encourage them to sign. Better yet, forward this posting through "Send to Colleague".

SHARE the attached flyer with colleagues. Place it in mailboxes or post it in locations that will be seen by other physicians.

The New American Solution

2008-04-28T14:49:00.000-07:00

Here is another quote from the Feb 7 2008 NEJM article of Robert Kuttner, a journalist and member of a political advocacy group, with the misleading name "Market based failure, a second opinion on US health care costs"

"Defenders of commercialized health care contend that economic incentives work. And indeed they do — but often in perverse ways. The privately regulated medical market is signaling pressured physicians to behave more like entrepreneurs, inspiring some to defect to "boutique medicine," in which well-to-do patients pay a premium, physicians maintain good incomes, and both get leisurely consultation time. It's a convenient solution, but only for the very affluent and their doctors, and it increases overall medical outlays."

And indeed economical incentives work. Who would have thought so? Money is the most direct connection to everybody's mind and heart. The author recognizing the effectiveness, but immediatley moves away to the supposed drawbacks ..."it works in perverse ways". It mihgt be counterproductive intially, when people do not go to doctors to save money, but sooner or later they will recognize that it is better to have a mammogram, rather than having to treat breast cancer at some point in time. Poeple have to learn that prevention is good, we cannot force them. We cannot regulate, administrate intelligence and cost efficient behaviour. It is simply impossible. People will have to learn.
We do not force everybody to start saving at age 15, and invest the interest back into the savings account. Right? Even though regular saving or investing with adding back the interest is one of the most powerful instruments to accumulate wealth, we do not force everybody to do it.
Why is health care so different? Why do we have to try to administrate our way to perfection in health care? Why do we not trust anybody with their own decisions?
We are on our own when we buy cars and take care of our cars. If we neglect them, they will rust, they will fall apart earlier and we will have to replace them earlier. People know this and take care of their cars. Why is health care different?

Apparently personal responsibility is undesired in health care, too many of us want to "have it all covered" and pay a high price for it, a price that, as it turns out, gets higher and higher every year.
The only solution to cost control in health care is to have consumers pay directly, cash. Only then will physicians be asked "Doctor, what is the most cost effective way to deal with this problem?"
Until we decide to go this route, health care costs will continue to climb and climb and climb, seemingly "unstoppable".
Well, not unstoppable at all. Health care costs are going up in exactly the same way in ALL countries in Europe and most countires around the world, yes exactly the same way as here in the US....
and why? Because the all use the "third party payer" system, that isolates the consumer from any kind of knowledge and responsibility of health care cost.
It is not the weird "market" here in the US, that is not even a real market, that dribves cost up, because cost goes up in single payer systems such as Canada and in three tier systems such as Germany. These systems are not the solution. They all struggle with cost increases. Why look to Europe when they have the same percentage of cost increases and the same range of dissatisfaction with their health care systems.
Are we not the greatest nation? Why would we look to the other ones for examples? Should we not lead instead of following?
We should lead by being the first country to institute cash care! Direct medicine. Responsibility and Affordability.
Capitalism is not the cause of the problems that plague our health care system, it is the CURE
More to follow

Kuttner is wrong. WE do not have a health care market and therefore it has not failed

2008-04-28T14:38:00.000-07:00

Sometimes you find a particularly flawed article. In early February I read an article in the New England Journal of Medicine by a journalist and member of a political advocacy organization. The article is called

Market-Based Failure — A Second Opinion on U.S. Health Care Costs

And it was written by Robert Kuttner

You can read it here .

A few comments:

Market Based Failure" is a misnomer. It is the “health management concept” in its present form that has failed. This failure should be attributed to the government that has set up the system in the first place. I would call this more accurately a "government based failure". It is surprising that someone who has been writing about the health care system and about politics for many years lacks the most basic knowledge about economics and about health care. We do not have a "health care market". It does not exist. Any 18 year old can see that. We have a very (!) limited market for "health insurances". Just that. Not for health care services, which is exactly the problem with our system. To postulate that we have a "health care market" is either plain stupid or cynical. For Mr.Kuttner's sake I assume he is being cynical and just tries to make a pro-government-monopoly point. A bit cheap though...

Here is what the past governments have set up: patients and physicians are blinded to the costs of all transactions. This alone shows that our health care system is not a "market". You cannot shop without knowing prices.

A powerful oligopoly of insurances dominates and overpowers individual physicians, which are not permitted to unite, unionize or even communicate in any way concerning pricing. Physicians can either participate at the conditions of the HMOs and Medicare or drop out of the system altogether. It is a “bad contract-no negotiation-take it or die” situation for physicians. Physicians are rewarded only for volume, not for quality, service or efficient use of resources. The healthcare consumer, the patient, not only has no idea at all what happens with his money, has also has no influence whatsoever on how his money is spent. This discourages cost efficient behavior to say it mildly. And neither physician nor patient is really held responsible for any cost, another major factor in increasing costs.

So, this is what the government has set up. Mr.Kutter believes that this government produced system has failed. With a rather incomprehensible logic he now wants to turn the whole system over to those people who have failed - the government. Go figure.

I believe we do not have a market in healthcare and I think we should finally have one. A market where costs are transparent, where everybody knows where the money is going, how it is spent.

The reason why every system around the world fails to contain cost is:

The consumer has no feedback about his spending. The consumer does not have skin in the game. The consumer is spending “other people’s money”

Americans (and Europeans equally) demand the best health care other people’s money can buy. As long as the “third party payer” system is intact, the spiraling health care costs will not be contained.

The author certainly is aware of the complete absence of true market characteristics in US health care. This makes his “second opinion” invalid. But let’s try something different:

"News are vital, and inconsistent quality and lack of informative value warrants a reform. All TV and radio stations, print media and Internet outlets will be merged into the government run "Federal News Department" (FND). The FND will the exclusive employer for all journalists and pay salaries mirroring the postal service. This will free journalists to focus on their work. Since they do not have "expectations of earnings", they will be just fine.

The FND issues comprehensive guidelines: All news have to follow templates, the number of words and paragraphs have to be consistent with formulas proven efficient in conveying information. Only words from federal vocabulary lists are permissible. We do not know how to measure performance, but we will cut salaries if "performance measures" are not met. I am sure, Mr. Kuttner, that you enthusiastically support my reform proposal!”

To dump health care into the lap of the government is the helplessly-throw-your-arms-in-the-air-and-give-up-version of reform, some people would call it the EEYORE version of reform.

Think before you support something stupid!

Why Health Care is expensive

2008-04-28T14:32:00.000-07:00

This is an excellent article that I found, and to my surprise it was published on the website of the CATO Institute. I completely agree with the conclusions of this analysis, which was published in 1994. Some things do not change......It is about time that more people take this analysis to heart, otherwise nothing will change for the better. The bottom line is: everybody spends generously when someone else is paying. This is one of the biggest reasons why the cost increase in health care seems unstoppable - besides the other reasons such as aging population and technical progress.
Very, very, very important, neither capitalistic HMO bureaucracy nor socialistic single payer as in Canada or in the UK are the answer. Both these systems are battling the same problem (and loosing). Both are failing. It is time to use the system that has made America great, the system that works so well for 5/6 of our economy, the system that made so many come to America: the free market! Capitalism is not the cause of our health care problems, it is the cure!

Begin quote:

Why Health Care Costs Too Much

by Stan Liebowitz

Stan Liebowitz is a professor of managerial economics in the Management School of the University of Texas at Dallas.

Health care costs have increased dramatically over the last few decades and are now thought to be excessively high. That has caused the current political reevaluation of our health care system, including its funding and performance.

This study is an analysis of the causes of the increase in health care costs. The major culprit in the seemingly endless rise in health care costs is found to be the removal of the patient as a major participant in the financial and medical choices that are currently being made by others in the name of the patient.

The increasing share of medical bills paid by third-party payers (insurance companies and governments) and the disastrous consequences are documented. Patients overuse medical resources since those resources appear to be free or almost free. Producers of medical equipment create new and more expensive devices, even if they are of only marginal benefit, since third-party payers create a guaranteed market. Attempts to rein in those costs have led to a blizzard of paperwork but proven ineffective in controlling costs.

The cure for the present problems is straightforward: the patient must once again be made the central actor in the medical marketplace. Patients need to be given the same motivations to economize on medical care that they have to economize in other markets. Tax laws need to be rewritten. The use of medical savings accounts needs to be promoted. High-deductible health insurance should be encouraged.

Returning the patient, and normal market principles, to center stage is all that is necessary to bring the costs of health care under control.

Introduction

One would practically have to be a modern Rip van Winkle not to be aware of the fact that the percentage of the gross national product devoted to health care has been rising for several decades. That fact figures prominently in the claim that health care is devouring too many of America's resources and that, therefore, the health system needs to be overhauled. The infamous growth of medical care relative to GNP is shown in Figure 1.

Source: Health Care Financing Administration

The focus on the share of GNP devoted to health care is somewhat unusual. For example, there does not seem to be any concern over the share of our wealth that is devoted to shoes, or automobiles, or housing. Moreover, there are many products, such as recreational activities, whose share of GNP rises as our wealth increases, yet there is no concomitant clamor to reduce our expenditure on them, as there is on health care.(1) The increasing share of GNP devoted to health care, by itself, is not evidence that the health care market is in need of repair.

More telling are attributes of the health care delivery system that make it inefficient, foremost among which is the

reliance on third parties (insurance companies and the government) to pay most medical costs. In 1990 third parties paid 77 cents of each dollar of medical expense. Because patients pay an average of only 23 cents on each dollar of medical expense, there is only a weak linkage between any consumer's use of medical resources and the payments made by that consumer. When the direct linkage between use of medical facilities and payment is broken, medical consumers lose their incentive to economize on their use of medical resources.

Another factor that usually portends inefficiency in any market is a high degree of government intervention in it, as the extensive literature examining government organizations has demonstrated.

Analysis indicates that our high medical costs are the result of various government policies that have removed patients as purchasers in the medical marketplace. While that state of affairs may be no more than the unlucky result of misguided policies, it is detrimental to the health of medical markets and, if improperly diagnosed, may eventually prove deadly to the literal health of many Americans.

Unfortunately, the proper diagnosis of our medical problems has been obscured by the demonizing of certain components of the medical industry. For example, the Clinton administration has at various times blamed the pharmaceutical industry, medical specialists, and health insurance companies for causing high prices and excessive medical expenditure. Such charges miss the underlying reasons for the current poor health of the medical delivery system, and diminish our ability to repair it. The failure to understand the causes of increased medical costs is apparent also in the Clinton proposal to revamp our health care system, which unabashedly increases our reliance on government and third-party payments.

Several competing proposals, however, have been suggested. Among them are some that adopt, at least in part, the medical savings accounts and tax-law changes proposed by John Goodman and Gerald Musgrave in Patient Power.(2) Central to the Patient Power approach is the weakening of third-party payment mechanisms and the reestablishment of the patient as both the consumer and the purchaser of medical services. By putting consumers back in control of their money, we can restore the vitality of the medical sector.

The Varieties of Excessive Costs

The excessive costs of our current medical system can be classified into three major categories:

• The first, and by far the largest excess cost, is due to the current overuse of medical resources by patients. Overuse is the rational response of consumers who do not have to pay the entire cost of the medical services they use. The causes of those excess costs are Medicaid, Medicare, and tax laws that provide incentives for individuals to have their employers purchase their medical care in the form of private health insurance.

• The second category of excess cost consists of administrative and paperwork costs that are unnecessary for the provision of health care, but that have come into existence because of the current patchwork of third-party payers and their attempts to control their increasing costs by closely monitoring the behavior of doctors and patients. Even worse is the fact that those cost-containment activities do not seem to have contained costs very well.

• The third excess cost is associated with the fear of malpractice suits. Administering medically unnecessary tests and procedures helps to insulate doctors and hospitals from the potential wrath of patients or their families when inevitable accidents occur in medical treatment or when treatments just do not work.

In some sense each of those costs has been brought about by the retreat from a market-based system of medical delivery. The first two of them could have been avoided if patients had been given incentives to make their own choices about medical care. The third cost could have been controlled if the courts had allowed patients and medical providers to use market contracts to detail liability in case of unforeseen accidents.

The Cost from Overusing Medical Resources

Largely ignored in much of the current debate over health care is the excessive use of medical resources by ordinary Americans. No politicians are giving speeches blaming the average citizens of the country for overusing medical care. There are no fireside chats with the president asking citizens to stop seeing doctors so often, asking parents to have their children "tough it out" and not see the doctor for every little scratch, asking the elderly to give up that extra year or two of life. Politicians are not so foolish.

But turning a blind eye to the consumption of medical resources by patients is a mistake. If the country is overusing medical resources, patients must bear responsibility for much of that overuse. We cannot cut our medical expenditures without reducing our consumption of medical resources. Fortunately, we know why patients overuse medical resources, and we know how to solve the problem. Unfortunately, the political will to enact correctives to the problem is not as easily come by, and the current administration in Washington seems to prefer to make empty promises to reduce costs while at the same time increasing medical services.

The concept of "excessive" medical use has a very precise meaning in economic analysis. When the marginal value of the resources used in a medical treatment is greater than the marginal value provided to the patient by the medical treatment, then the medical treatment is classified as "excessive." Note that the economic concept does not require that the medical treatment be without value altogether.

That definition needs to be contrasted with that of the medical community, which typically defines "excessive" treatment as a treatment that is not medically beneficial, as in the claim that cesarean sections are performed in many cases where they serve no positive medical purpose. The medical definition of "excessive" is similar to that of "fraudulent." Patients purportedly accept unneeded treat ment because they are misled by doctors. Yet the economic concept of "excessive" does not require any deceit or fraud at all. It merely requires that patients receive treatment that the patients themselves value at less than the cost of the treatment.

The economic concept of excess use of medical resources is illustrated in Figure 2, which is a version of a simple diagram that can be found in virtually any introductory economics textbook. In Figure 2 medical care is simplified into a single unidimensional concept for the purposes of illustration, but the ideas contained in the diagram are perfectly general and can apply to any particular medical procedure. The downward sloping line represents the value to patients of increasing amounts of medical care. Not all patients have the same value for a given procedure: some patients are not likely to live a useful or productive life, even with treatment; others expect to be able to live many productive years afterwards; still others prefer to preserve resources for their children and forgo treatment. Various persons, therefore, will have different values for identical medical procedures, since the impact of the procedure on their lives will be different. Their differing values for the medical service are arrayed in order, measured by dollars, from highest to lowest, in Figure 2. In the jargon of economics, it is a demand curve.

The upward sloping line represents the value of resources that are used when providing medical services. Doctors, nurses, hospitals, and the other resources currently used in providing medical care could be productively put to use in other activities. Thus, the provision of medical services is a cost to society, in the sense that resources that are used to provide medical care cannot then be used for something else. The measure of the value of lost resources is known as the opportunity cost of producing medical services.

In Figure 2, the cost of providing additional units of medical service is shown by the upward sloping line, which is usually called a supply curve. It is shown to slope upward because it is often (but not necessarily) thought that the resources used first in this market are best suited for medical uses relative to other uses, and those used last are poorly suited to medical uses.

It is a simple matter to determine the optimal quantity of medical services in a diagram such as Figure 2, and students in introductory economics classes have been doing so for decades. The quantity of medical services Q* is the optimal amount of medical service.

That can be understood by examining the implications of other quantities of medical service. For quantities of medical service greater than Q*, a unit of additional medical service is of lower value to patients than is the cost of providing it. In other words, patients would prefer cash equal to the value of the resources used to provide the medical services to receiving the medical services. Thus, it impoverishes patients and society to produce medical services when the recipient of the service would prefer those resources to be used for a different purpose. Similarly, for quantities less than Q*, patients value an additional unit of medical service more than they value the resources used to provide that unit of medical service. Producing the extra unit of medical service would enhance the well-being of patients and society. Thus, if the extra unit is not produced, society is deprived of a potential gain. Therefore, the quantity Q* is the efficient output. At Q*, the net value (value to consumers minus resources used up) of medical services is maximized.

Unfortunately, the current medical system does not induce patients to choose the efficient quantity Q*. Because patients largely have their medical bills paid by third parties, it is rational for them to consume medical services even when the value of those medical services is less than the value of the resources used to provide them.

Third-party payments are of two forms. First, most patients have private health insurance, usually provided by their employers.(3) A typical feature of such insurance is that when insured patients go to doctors, or hospitals, they pay only a small part of the actual cost of the visit, known as a copayment. Second, most patients without private health insurance are covered by government health insurance, either Medicare or Medicaid. Those patients also pay only a portion of the actual costs of the medical resources they use. As a result, there are very few persons who actually pay their entire health care bills out-of-pocket.

Figure 2 can be used to illustrate the situation in which patients pay zero out-of-pocket expense for medical procedures. Although zero out-of-pocket expense is something of an exaggeration (such expenditure is actually 23 percent), that assumption makes the issue easier to understand. In that case, patients have no reason to refuse any medical procedure, no matter how little the value of the procedure might be to the patient.(4) The quantity of medical services that patients will request will be Q1. The extent of the unnecessary medical services is given by the difference between Q1 and Q*. Those excess medical procedures have some value (given by area D), but their value is too low to justify the expense of the procedure.

The unshaded rectangle in Figure 2 represents the expenditures that society would make for medical care if it were provided in a fully functioning marketplace. It is merely the product of the price P* and the quantity Q*. The shaded region represents the excessively high expenditures that occur when third parties pay for all medical care. It is equal to the product of the excess quantity, Q1, and the higher price of medical care, P1, minus the product of P* and Q*.

Some of the excess expenditure goes to sellers of medical services, indicated by areas B and C. The extra revenue going to providers may explain why they have been willing participants in the movement away from consumer payment for medical care.(5) Some of the excess expenditure produces value to consumers, given by area D. But some of the excess expenditure is pure waste, known to economists as deadweight loss, and given by the triangular portion of the shaded area indicated as A.

The excess consumption at a point such as Q1 will likely take the form of excess quality since, in some sense, quality and quantity are interchangeable. Too many hospitals might contain expensive state-of-the-art equipment; too many patients might occupy singleor double-occupancy rooms rather than wards. Overall, the quality of care will be too high, even though there clearly is some value in the additional care. We have chosen a Cadillac of health care systems when a Chevrolet is more in line with our willingness to pay. It is understandable that some commentators are reluctant to characterize the problem of excess quality as a "crisis." Of course, it is not really the quality of health care that is in crisis; it is the financing. Making monthly payments on a Cadillac can seem like a crisis to someone making Chevrolet wages. Too much of an economic good can be as harmful as too little.

The Impact of Third-Party Payment on Medical Spending

Measuring excessive use of a product is a difficult and usually imprecise task. The best that can be hoped for is a crude estimate, and even that will require some rather broad generalizations, such as lumping many disparate medical resources into a single whole.

The analysis consists first of measuring the relationship between third-party payments and changes in the use of medical resources. Then the current use of medical resources is compared to the resources that would have been used if patients had paid for their own health care (Q* in Figure 2). The difference measures the excessive use of medical resources.

Third-party payment mechanisms are now very common, although before World War II individuals generally purchased medical services just like any other economic commodity and paid for them just like any other economic commodity--out of their own pockets. But during the war many companies began to offer medical benefits as a way to avoid price controls and to take advantage of the tax code. As shown in Figure 3, there was an explosion of private health care coverage shortly after World War II.(6)

Source: Based on data from Health Insurance Association of America, 1991 Source Book of Health Insurance Data.

In addition, 1965 was the year in which the government introduced Medicare and Medicaid, which pay for much of the medical care of the elderly and the poor. The combination of the increased use of private health insurance and in creased government payments in the last few decades has reduced the out-of-pocket expenses of consumers dramatically. Figure 4 shows the fall in out-of-pocket expenses since 1960.(7)

After 1960 the fall in out-of-pocket expense was mainly due to increases in government expenditure. Although not shown, there was a significant decrease in out-of-pocket expenses due to increases in private health insurance in the 1940s and 1950s. The overriding conclusion to be drawn from Figure 4 is clear, however. The role of third-party payment has increased significantly in the last few decades.

Some of the most compelling evidence that third-party payments alter the use of medical resources comes from a study performed under the auspices of the RAND Corporation in the late 1970s.(8) That study assigned families to four health insurance plans with differing coinsurance provisions and deductibles. Coinsurance is the percentage of medical bills paid out-of-pocket by the patient. The deductible measures the maximum total dollar amount that a family will pay out-of-pocket before the plan will drop the coinsurance requirement and pick up the entire medical bill. Some families had zero coinsurance, meaning that the plan paid all of their medical bills, while other families had to pay up to 95 percent of the cost of their medical bills, until their bills reached a total deductible level of $1,000 in 1973 dollars, which is the equivalent of approximately $2,850 in today's dollars.(9)

Source: Based on data form Health Insurance Association of America, 1991 Source Book of Health Insurance Data.

The RAND researchers observed how the different coinsurance rates influenced the use of medical resources by 2,500 families for three to five years. They found very pronounced changes in the use of medical resources, depending on the extent of third-party payments. In particular, families with no coinsurance (complete third-party payments) used 53 percent more hospital services (measured in dollars) and 63 percent more visits to doctors, drugs, and the like than did the group that paid 95 percent coinsurance. Overall, the total use of medical resources was 58 percent greater for the group with no coinsurance. Thus, there is clear indication that the use of medical resources by patients varies dramatically with the existence of third-party payment mechanisms.

Figure 5 shows the relative medical expenditures for each of four groups in the experiment. As the share that patients pay drops below 50 percent, the use of medical resources increases dramatically. It is interesting that this experiment did not find increased use of medical resources as the out-of-pocket share dropped from 95 percent to 50 percent. That may mean that consumers do not begin to overuse medical resources seriously until they pay less than half the cost, or it may just be a statistical anomaly, as the authors of the RAND study point out.

Source: Data from RAND health insurance experiment, cited in Joseph Newhouse et al., "Some Interim Results from a Controlled Trial of Cost Sharing in Health Insurance," New England Journal of Medicine, December 17, 1981.

The decrease in use of medical resources by families with high copayments might have been thought to decrease their health. One of the criticisms that has been made of high-deductible, high-copayment medical plans is that they discourage inexpensive preventative medicine, causing higher medical payments down the road. But the RAND study found no significant difference in health outcomes. In addition, a study by Robert Brook and others, reported in the New England Journal of Medicine, concluded that free medical care did not appear to improve the health of the participants.(10) Thus, it appears that the excessive costs associated with excessive use of medical resources do not materially improve the health of those receiving that care, a result that should not be surprising. Most persons are likely to be willing to pay for inexpensive medical services that provide enhanced future health. Moreover, the prevention of disease is most often associated with activities that individuals engage in for their own reasons, and that are not strongly related to visits to doctors (e.g., they stop smoking or they exercise).

It should also be noted that the RAND study was conducted in such a way as to underestimate the impact of third-party payments on total medical expenditures, because the impact of third-party payments in the experiment could not appreciably influence the price of medical resources, since the number of participants in the study was too small a percentage of the market to have influenced market prices. However, if the measured increase in use of medical resources found by the RAND researchers were duplicated throughout the country by millions of patients, as more and more of them switched to third-party payments, the price of medical resources could be expected to rise, and the increase in expenses could be expected to be larger than that found in the RAND experiment.

The RAND experiment is not the only estimate of the response of consumers to medical payments. A large number of other studies conclude that medical consumers do respond to price changes, and the degree of response found is often similar to that reported in the RAND study. There is virtual unanimity in the belief that higher levels of third-party payment will increase the use of medical facilities by patients.(11)

In the RAND study patients responded within a few years to changes in third-party payments. Yet it is likely that, for society as a whole, the complete reaction to changes in third-party payments might take a longer time to work through the system. Once third parties pay for a large share of total costs, technologies that might not have been cost effective when the patient was paying the full cost will be demanded by patients.

A simple analogy can be used to illustrate the impact of third-party payment on the growth rate of medical expenses. If the government told citizens that it would pay 80 percent of the cost of each automobile purchased, most citizens would march right out to their local dealerships and order very expensive cars. Automobile manufacturers, sensing profits in the air, would begin to offer far more standard equipment and would begin to offer more new types of equipment than they had previously. What was formerly a luxury car would become commonplace, and new, more luxurious automobiles would be produced. The newest technologies would be used (rather like those used in jet fighters), since the cost to the consumer would be only a fraction of the actual cost. Thus, the growth in automobile expenditures caused by the third-party payments could go on for many years.

A similar story can be told about the health care industry. Although the RAND experiment indicated that consumers responded quickly to third-party payments, the longer run consequences might continue for decades. It is possible to examine that hypothesis by comparing the growth in expenditures over several decades for various medical products that have considerable variation in the degree of third-party payment. As most persons who have experienced the choices available with different health insurance policies can testify, medical services related to dental and vision care (eyeglasses) and drugs or medical appliances tend to have much higher out-of-pocket expenses than hospital stays or visits to doctors. Figure 6 indicates that major differences exist in the share of out-of-pocket expenses borne by the patient for various categories of care.(12) In 1990 third parties paid virtually all hospital bills (95 percent), making hospitalization essentially a free good for most Americans, and only 20 percent of physicians' bills were paid by patients. On the other hand, 53 percent of dental bills, 74 percent of drug expenses, and 68 percent of eyeglasses bills were paid by patients.(13)

If third-party payments influence the growth of medical expenditures, then the increased use of medical resources in the past few decades should differ for the various types of medical services. That prediction is generally borne out, as shown in Figure 7, which shows the growth in each of the medical sectors, relative to their 1965 amounts, after controlling for the effects of inflation. Thus, the total costs of hospitalization increased more than 350 percent from 1965 to 1990, even after controlling for general inflation. During the same period, physician payments went up almost 250 percent, yet costs for dentists, drugs and appliances, and vision care went up only 150 to 200 percent. At the same time, real GNP went up by 94 percent.(14) It should be no surprise, then, that medical costs are gobbling up larger and larger shares of GNP.(15)

Source: Based on data from Health Insurance Association of America, 1991 Source Book of Health Insurance Data.

It is particularly ironic that drug manufacturers have been singled out by the Clinton administration as being responsible for the spiraling costs of health care in light of the fact that the growth in drug expenditures is far less than the growth in overall medical costs, particularly hospitalization. The relationship between growth in expenditure and out-of-pocket payment is more clearly seen in Figure 8. For five categories of medical care, the share of costs paid by patients is related to the growth in real expenditure over a 25-year period. The relationship is as expected: medical categories with low levels of third-party payments (high out-of-pocket expense) had the smallest increase in total expenditures. Although there are only five data points--and the small number of observations requires that we be cautious in trying to generalize the results--it is still noteworthy that the results indicate a powerful relationship between the level of coinsurance and the growth of medical expenditures.

The three medical categories having a relatively small third-party payments--dental services, drug products, and vision products--also show growth rates that are not a great deal higher than the overall growth of GNP (194 percent). The two categories with the greatest level of third-party payments experienced the greatest growth. The rank correlation between the growth of medical costs and the share of the medical bill paid out-of-pocket is perfect.

The line drawn through the points is a linear regression line.(16) It is almost a perfect fit through the points, and its interpretation is straightforward: the larger the share of medical expense paid by the patient, the smaller the growth in expenditure on that medical product.(17) Extrapolating the line to a point where patients pay completely for medical services would lead to the conclusion that medical services would grow at a rate only slightly greater than the overall growth in GNP.(18) Table 1 gives the expected share of GNP devoted to medical care in 1990 for various levels of third-party payments, based on the results shown in Figure 8.

Table 1 Medical Care's 1990 Share of GNP for Different Third-Party Payments (1965 base)
If Patients Had Paid (%)	Percentage of GNP in 1990 Would Have Been
100	6.8
75	8.7
50	10.6
25	12.6
0	14.5

Thus, the evidence indicates that if the effect of third-party payment had been eliminated, the growth in medical expense would have been much smaller than it actually has been. The reality is that medical expenditures have risen from 4.4 percent of GNP in 1950 to 12.2 percent in 1990 to over 14 percent today. That increase has occurred under a regime of increasing third-party payments. Yet without third-party payments, the growth rate of medical care would have been much smaller, and the "crisis" in health care would not have been a crisis at all.

But even the figures in Table 1 estimating the importance of medical care under regimes of low third-party payments will, to some extent, overestimate the importance of medical care as a percentage of GNP. That is because the base year, 1965, was already severely tainted by the influence of third-party payments, and thus the level of medical spending was already significantly higher than it would have been had third-party payments not been as high as they were.

Finally, it is disconcerting to note that two of the three categories that have experienced the smallest increase in total expenditure--dental and vision products--are going to be brought under the umbrella of third-party payments in the proposed Clinton health plan, a policy that will ensure that our current problems will get worse. Instead of trying to duplicate the relatively good performance of dentistry, eye care, and drugs in the relatively profligate categories of hospitalization and physician payments, the Clinton administration appears determined to impose the egregious performance of hospitalization and physician expenses on the few areas not currently suffering from an explosion in costs.

Evaluating Excessive Output

The historical evidence just examined indicates that with no third-party payments, the medical bill for the nation would be less than 7 percent of GNP instead of the current level of 14 percent. Stated another way, current spending is approximately double the level it would have been if third-party payments had not existed. However, since insurance for calamitous medical bills is valuable, so is some level of third-party payment. Assuming that the alternative to the current system will still leave thirdparty payments in the vicinity of 25 percent implies, based on Table 1, that the share of GNP devoted to medical care would be in the range of 8 to 9 percent. In dollar terms, that translates into a conclusion that for 1992, under a system with third-party payments in the vicinity of 25 percent, medical spending would have been approximately $300 billion less than the actual payments.(19) That is not to say that the excessive $300 billion provides no value, but that it provides less value than cost and would not have been spent if patients had been making the financial decisions.(20)

Although that estimate of excessive expenditure may seem like a fairly enormous sum, it is actually quite conservative. Other analyses in the literature provide a much larger estimate of the increased use of medical resources. Martin Feldstein estimates that for hospital care, the largest single component of health care, the increase in expense that would be caused by a change from complete out of-pocket expenses to complete third-party payments might be as high as 250 percent.(21)

Even the RAND study, which provided an underestimate of the impact of third-party payment, concluded that virtually complete third-party payments would increase medical costs by at least 60 percent relative to what they would have been with much lower third-party payments, a result not far from that found in the historical data.

Excessive Costs of Monitoring

Much of the public debate over health care centers on the amount of paperwork that is required. Hospitals and doctors fill out a plethora of forms for health insurance companies and for the government. But in fact the paperwork (administrative) costs of the current system are not the largest unnecessary costs in our medical system.

It is possible to gauge total administrative costs by focusing on the administrative costs of health insurance, the component of administrative costs that appears to be most precisely measured. Comparing those costs to the other costs of the health care system (Figure 9) makes it clear that the measured administrative costs of running health insurance companies are not a large proportion of the total. Indeed, in 1990 they came to 5.81 percent of the total cost of our health care system.(22)

However, health insurance administrative costs are only a part of the true administrative costs of the current system. After all, hospitals and physicians have enormous amounts of paperwork, much of which they send to the health insurance companies. Yet only the costs to the insurance companies are included in Figure 9. Still, the administrative costs of running health insurance companies should mirror the costs that hospitals and physicians incur, since the forms go back and forth between those parties. If so, then the growth of one category of administrative costs will reflect the growth in other categories of administrative costs.

As a first approximation, administrative costs could be expected to grow at about the same rate as other medical costs, since some administration is necessary. If administrative costs are excessively high, and if the excess has not been in the health system from the beginning, then we should find that administrative costs have increased by more than other medical costs. Figure 10 compares the growth of total medical costs with the growth in the cost of administering private health insurance since 1965.

Source: Based on data from Health Insurance Association of America, 1991 Source Book of Health Insurance Data.

Figure 10 indicates that administrative costs increased slightly less than overall medical costs from 1965 to 1975, but that since 1975 they have grown very rapidly.(23) Thus, there is some evidence to indicate that administrative costs might be too high. It is important to understand just why those costs might have started to grow so rapidly after 1975.

The most likely explanation seems to be the emergence of Professional Standards Review Organizations (PSROs) in 1972 and Professional Review Organizations (PROs) 10 years later. Those organizations are privately contracted agents of the government that review the decisions made by doctors and other health professionals, purportedly to save taxpayers money on Medicare and Medicaid cases by eliminating unnecessary or wasteful expenditures. Since private health insurance companies act as fiscal intermediaries for the government's Medicare program, the reviews are bound to affect their costs as well. The flip side is Utilization Review (UR), a system very similar to PROs, in that private health insurance companies hire third parties to review the behavior of doctors. All three systems give doctors incen tives to document all aspects of care, since otherwise they might not be compensated by the third-party payer.

If the entire difference in the growth of administrative costs and other medical costs since 1965 were taken to be excess administrative costs, then 50 percent of current administrative costs would be excessive. And it is inter esting that there is no evidence that the extra administrative costs have lowered overall medical costs, so that the supposition that the new administrative costs do not provide any value seems plausible. Of course, the true test of whether the additional administrative costs are worthwhile requires comparing actual medical costs with what the costs would have been without the additional administrative costs, a test that I do not attempt here, nor am I aware of any such calculation by others. Since administrative costs for health insurance were somewhat less than $50 billion in 1990, and doctors and hospitals must duplicate those costs, we can conservatively assume that total administrative costs are at least $100 billion. Then, if the costs were 50 percent too high, the excessive administrative costs would be $33 billion.

There are many estimates of the excess costs of administering health care, as might be expected given the difficulty in measuring them.(24) It has been claimed that current administrative costs are twice as high as they should be, and that as much as 10 percent of medical expenditure is excess administrative costs. Still, even those estimates indicate that excessive administrative costs are small ($83 billion in 1992) compared to the excessive use of medical resources due to third-party payments.

The current Clinton heath plan claims that there will be large savings in administrative costs and that those savings will help to cover the cost of health insurance for some 37 million Americans who are thought not to have health insurance at any moment.(25) But those cost savings are predicated on there being fewer forms to be filled out, since there will be fewer insurers. But if the additional administrative costs are due to wasteful utilization reviews by third-party payers, there would be no reason to expect administrative costs to fall, given that the Clinton plan expands the role of third-party payers. The Clinton plan also adds entire new layers of government bureaucracy, which, if history is any guide, seems most unlikely to reduce overall administrative waste.

How Patient Power Lowers Health Care Costs

The Patient Power plan avoids excessive costs--both those associated with excessive use of medical care and those associated with excessive administrative burdens. It reduces medical expenditures by giving patients an incentive to use medical care efficiently, rather than overusing it. To that end, tax laws would be altered. The tax break extended for the purchase of health coverage would be allowed only for basic, no-frills catastrophic insurance policies. No longer would patients be faced with a choice of having their employer pay for small medical bills with before-tax dollars or paying out-of-pocket costs with aftertax dollars. Thus, there would be no reason for them to prefer to have insurance pay for most medical bills, and insurance policies would no longer carry small copayments. As we have seen, that is the most crucial element in stopping the soaring increase in health care costs without clumsy, government-imposed price controls.

The Patient Power plan would allow patients to selfinsure (meaning that patients themselves pay for the treatment of their illnesses) for many potential medical bills through medical savings accounts that would go hand in hand with the tax changes. It typically costs an employer more than $4,800 to provide health insurance for a worker, her spouse, and two children. Under the Patient Power plan, employers would purchase only catastrophic policies for workers, and workers would deposit the savings in premiums in medical savings accounts. The medical savings accounts could be used to pay for small, routine medical bills not covered by catastrophic health insurance. If the account was not used to pay for medical bills, the owner could roll it over into an IRA to be used for other purposes after retirement. Patients would have an incentive not to use their medical savings accounts except for medical care that they deemed worth the money, since they would benefit directly from economizing on medical care. In addition, selfinsurance eliminates the paperwork involved with having third parties pay medical bills. It also eliminates the costs of having third parties monitor the transactions between patient and doctor, thereby greatly reducing administration costs generated by PSROs, PROs, and URs.

Second, Patient Power would reduce state regulations that currently mandate many benefits that must be provided by each health insurance policy sold in a state irrespective of patients' wants or needs. Such regulations drive up the price of health insurance and make the purchase of a policy less attractive for persons who are not interested in the extra benefits mandated by the state. If consumers are allowed to purchase insurance that is tailored to their specific needs without having to comply with state mandates, they will be happier and will save money.

Finally, Patient Power would reform tort law to allow patients and doctors to contract in advance to rationally insure against accidents or errors.

Conclusion

The moral of this story is crystal clear: third-party payment mechanisms have raised the total consumption of medical resources to unprecedented levels. The excessive use of medical resources due to third-party payments was estimated to be over $300 billion and the excessive administrative costs to be in the vicinity of $33 billion.

To lower the currently very large medical expenditures in the United States, the third-party payment system must be reined in. Putting the patient back in control of the medical purchasing decision is the most effective way to control third-party mechanisms, while still providing a safety net for Americans.

The worst policy that we could follow would be to increase third-party payments and reduce copayments. Yet that is exactly what is proposed by the Clinton administra tion. The evidence makes it abundantly clear that the current increase in medical bills will only be exacerbated by the Clinton plan and that rising costs will quickly run into the spending caps contained in the Clinton plan. That plan would be greatly improved if it were to impose high copayments on patients instead of low copayments, and if it were to keep predictable and relatively inexpensive medical costs, such as dentistry and eye care, out of the thirdparty payment system. But even if those changes were made, the Clinton plan would still create a large government bureaucracy controlling and limiting consumer choices, and it still would contain the dreadful idea of spending caps as a means of reducing medical costs.

The Patient Power plan is much more likely to reduce health care costs.

Notes

(1) Recreational expenditures, relative to disposable in come, increased from 5.0 percent in 1958 to 7.1 percent in 1988, according to statistics reported in Harold Vogel, Entertainment Industry Economics (Cambridge: Cambridge University Press, 1990), p. 348.

(2) John C. Goodman and Gerald L. Musgrave, Patient Power: Solving America's Health Care Crisis (Washington: Cato Institute, 1992).

(3) Ibid. That appears to be an outgrowth of two factors. First, during World War II price controls were in place at a time when employers were looking to increase the pay of workers. Providing additional fringe benefits allowed employers to circumvent price controls, and fringe benefits thus became a common part of an employee's compensation. Second, tax laws allow employers to deduct medical insurance premiums, whereas individuals have no such right (unless their medical bills are large enough for them to declare them as itemized deductions, which is certainly not the usual case). Obviously, those factors provide a strong incentive for most employees to purchase their medical insurance through their employers.

(4) Note that the inconvenience of the medical procedure, lost wages, pain, and so on, are taken into account in the patient's valuation of the medical procedure. Thus, a patient will request any procedure for which all "psychic" costs are less than the benefits, ignoring the monetary costs of the procedure itself.

(5) Although the leadership of the American Medical Associa tion originally opposed Medicare in 1965, they were against it for philosophical reasons and actually predicted that it would increase revenues going to doctors. Their opposition ended when most doctors realized the bonanza that it provid ed. See Edward Annis, Code Blue (Washington: Regnery Gate way, 1993).

(6) Health Insurance Association of America, 1991 Source Book of Health Insurance Data (Washington: HIAA, 1992), Table 2.2.

(7) Ibid., Table 4.4.

(8) Joseph Newhouse et al., "Some Interim Results from a Controlled Trial of Cost Sharing in Health Insurance," New England Journal of Medicine, December 17, 1981.

(9) Using the GDP deflator found in Robert J. Gordon, Macro economics (New York: Harper-Collins, 1993), appendix A.

(10) Robert Brook et al., "Does Free Care Improve Adults' Health? Results from a Randomized Clinical Trial," New England Journal of Medicine, December 8, 1983.

(11) Alan Sorkin reports on 20 estimates of price elasticity for various medical services. Price elasticity measures the responsiveness of consumption to changes in price. The majority are between 0.2 and 1, which is consistent with the RAND experiment. Sorkin, Health Economics (New York: Lex ington Books, 1992), p. 31.

(12) Health Insurance Association of America, Table 4.1.

(13) A large portion of expenditures on drugs is for overthe-counter products, which most medical plans do not cover.

(14) Ibid., Tables 2.2, 4.1, and 4.4; and Gordon, appendix A.

(15) There were three other categories of expenditure that were not included: nursing home expenditures, other health services, and other professional services. Since the con tents of categories with the term "other" is unclear, and might change dramatically over time, I followed the common practice of removing them. Nursing home expenditures in creased dramatically over the period, but that is probably more attributable to the decline in the extended family and the increase in life span than it is to any increase in medical use. Nursing homes, after all, generally do not respond to specific health problems so much as to old age and general inability to look after oneself. (Younger family members used to look after elderly relatives.) In addition, regulation of nursing homes during the period raised their costs significantly, according to Goodman and Musgrave, p. 107. Had those categories been included, the statistical confidence in the relationship between out-ofpocket costs and growth in expenditure would have weakened considerably, although the direction of the relationship would have been the same.

(16) Obviously, the change in expenditures on those catego ries of medical care are likely to depend on many variables other than just the change in copayments. Some of those factors are changes in age cohorts, changes in medical technology (which itself is likely to be affected by the copayment rate), and changes in diet and exercise. Never theless, these results are consistent with those of prior studies, are statistically significant, and are not related in a clear way to potential left-out factors.

(17) Regressing on the share of out-of-pocket expenses (OOPE) gave the equation: Growth in Expenditures (GIE) = -255 _ OOPE + 478. The t-statistic on OOPE is 12.34 and the rsquared (adjusted) is .97. Those coefficients imply that if out-of-pocket expenses had been 100 percent, medical expen diture would have grown in 1990 to only 223 percent (478 255) of its 1965 value. The GNP in 1990 was 194 percent of its 1965 value, so medical care would have remained almost constant as a percentage of GNP.

(18) This estimate implies a higher growth in medical expen diture than some others suggest. For example, Sorkin re ports that most estimates of income elasticity of medical care are in the range of .5 to .7, meaning that medical expenses would be expected to grow only 60 percent as fast as income, holding everything else constant.

(19) In 1992 spending on medical care was approximately $830 billion. Assuming that our best alternative is to have third-party payments in the vicinity of 25 percent, we would expect current spending to be approximately 60 percent too high. Thus, for 1992, under a system with smaller thirdparty payments, medical spending would have been only $520 billion, and, therefore, slightly over $300 billion in health care spending was excessive.

(20) Measuring the actual deadweight losses associated with excessive expenditures is an imprecise task. Martin Feld stein calculated the possible deadweight losses from the overuse of hospitalization. On the basis of the 1969 outof-pocket expense of 33 percent, he estimated that the dead weight loss ran from a low of 23 percent of total hospital revenues to a high of 67 percent of total revenues. Felds tein, Hospital Costs and Health Insurance (Cambridge, Mass.: Harvard University Press, 1981), chap. 6. With current outof-pocket expenses for hospitalization running at only 5 percent, we would expect even larger deadweight losses than he found. Feldstein reports (p. 99) that Mark Pauly mea sured welfare loss at $450 million for 1963, which is 15 percent of 1963 total health expenditures, as reported in Health Insurance Association of America, Table 4.4.

(21) Feldstein, p. 66. He reports estimates that the elas ticity of hospital days with respect to price is between .5 and .7. Assuming that .6 is the appropriate number, and assuming that it is an arc elasticity, decreasing payment from the market price to zero would increase usage by 250 percent.

(22) Health Insurance Association of America, Table 4.1.

(23) It should be noted that using data on personal consump tion expenditure, which exclude Medicaid and some other government spending (public health, research, construction) and which go back to 1950, there is no evidence that admin istrative costs grew more rapidly than other medical expens es from 1950 to 1965.

(24) Some of the higher estimates come from Steffie Wool handler and David Himmelstein, "Administrative Costs of U.S. Health Care," New England Journal of Medicine, May 2, 1991; they claim that about 20 percent of medical spending is administrative in nature. They also claim that health care administration costs in Canada were only about 10 percent of health care spending, and conclude, therefore, that about half of the U.S. administrative expense was wasteful. They also note that there was a very significant increase in wasteful administrative costs between 1983 and 1987, for which they blame the increased use of cost-containment mechanisms. There are good reasons to be suspicious of those results, as reported in a critique of the study by the Health Insurance Association of America in the May 30, 1991, issue of Medical Benefits.

(25) Although approximately 37 million Americans may not have health insurance on any given day, only about 7 million fail to have health insurance for an entire year. Most uninsured individuals are only temporarily uninsured.

Published by the Cato Institute, Policy Analysis is a regular series evaluating government policies and offering proposals for reform. Nothing in Policy Analysis should be construed as necessarily reflecting the views of the Cato Institute or as an attempt to aid or hinder the passage of any bill before Congress. Contact the Cato Institute for reprint permission. Printed copies of Policy Analysis are $6.00 each ($3.00 in bulk). To order, or for a complete listing of available studies, write to: Policy Analysis, Cato Institute, 1000 Massachusetts Avenue NW, Washington, D.C. 20001. (202)842-0200 FAX (202)842-3490 E-mail subscriptions@cato.org

© 1994 The Cato Institute

End of quote

Micropractices, a great idea for Physicians and a step towards free market in health care

2008-04-28T14:30:00.001-07:00

The Journal of the American Academy of Family Medicine has published this article under the tag "Robin Hood Practice".

A fitting header, since Robin Hood stood up against the evil sheriff of Nottingham and...won.

Cash medicine is the way of the future, better than insurance hassles and abuse, better for the patient.

This is a quote!

Begin quote:

Seven years ago, I was a contented doctor in what I considered to be an above-average practice. Our group of seven family physicians earned incomes well above the national average. I had a panel of 2,600 patients and was taking six to eight weeks of vacation per year.

But our profitability came with a cost. We were passing patients through the office faster and faster, with more and more things falling through the cracks. Worst of all, many of my patients who lost their health insurance were no longer able to pay for the care they needed. I came to realize that I wanted something more for my patients and myself.

In a moment of inspiration, I decided to create a cash-only, low-overhead, technology-enabled, retainer-model practice in which I could care for patients who could afford to pay out-of-pocket for enhanced service as well as uninsured patients who could pay little or nothing at all. The practice's feasibility depended on a simple concept. I would recruit a small panel of patients willing to pay an up-front annual fee in exchange for extended patient visits (30 to 60 minutes), exceptional service, same-day access for all needs, direct access to me via electronic messaging or cell phone, and 24-hour on-call coverage. From these patients' enrollment fees, I could earn enough to spend half of my time providing primary care at no cost to uninsured patients who were ineligible for government health programs. It would be the ultimate self-sustaining nonprofit clinic. With this setup, I would regain my status as a physician whose paycheck was signed by his patients and not by third-party payers.

Formulating a plan

The more I thought about the idea, the better it sounded. I was fairly sure it would work, but I was nervous about making the leap. Then, in early 2002, my motivation increased after reading a series of articles in FPM by Gordon Moore, MD, on going solo in a small, low-overhead practice. I shared my idea with another family doctor from across town. He suggested we open the practice together. I realized that a two-physician practice would remove many of the concerns I had about cross-coverage for vacation and sick days. We could also share the overhead of hiring one medical assistant.

It was time to crunch the numbers. I knew from 14 years in a mostly capitated practice that my patients visited me an average of 3.6 times per year for 15-minute appointments. To provide the quality of care that we believed patients would expect in exchange for the retainer fee, we determined that we would need to be able to provide each one (we call these patients "benefactors") with approximately five 30-minute visits per year. We figured we needed about $600,000 in revenue per year to run the practice and pay ourselves and our medical assistant. At five visits per benefactor per year, we could see a total of 600 benefactors per year. To take in $600,000, we would need to charge an average of $1,000 per benefactor per year. For a breakdown of all of these calculations, see "How we did the math," on page 15.

My colleague and I began meeting weekly to outline the details of our plan. We formed a mission statement with concise goals. As practicing Catholics, we wanted the practice to have a distinctly Catholic flavor. We discussed the idea with our bishop's representative and later received a letter of his spiritual (but not financial) support. We began to contact friends and acquaintances with special skills who were willing to volunteer their time to the project: an accountant, two attorneys, a small-business consultant, an insurance broker, a priest and a graphic designer. We formed a board of directors and committed to an ambitious start date just 12 months away.

St. Luke's Family Practice is governed by a board of directors that meets regularly. Pictured are (from left to right) Douglas R. Hibl; J. Peter Herrmann, MBA; Dr. Forester; Terrance P. Withrow, CPA; and John Dunn, JD.

The nuts and bolts

The AAFP book On Your Own: Starting a Medical Practice From the Ground Up (available for purchase at http://www.aafp.org/catalog) provided a helpful outline for building our new practice from scratch. The attorneys on our board of directors helped us with articles of incorporation and bylaws. We applied for federal tax-exempt 501(c)(3) status as a nonprofit public benefit corporation.

Next we verified details of our status with several PPOs, Medicare and TRICARE, to be certain that when we made referrals or ordered tests for our benefactors that those providers' claims would be paid. The insurers repeatedly emphasized: "Yes, but you won't be able to bill us at all. Your patients will be wholly responsible for paying for your services." After a while, we quit trying to explain that we didn't want to bill insurance companies.

We developed a corporate identity, including a logo and an information pamphlet. We began designing a Web site (http://www.stlukesfp.org) that we would use initially for marketing and later for online scheduling, password-protected electronic messaging and patient education.

Seven months before opening, we told our respective physician partners of our plan. From our current lists of patients, we selected prospective benefactors and contacted them to explain our new practice concept. Three months out, we mailed pamphlets that included an invitation to upcoming informational meetings. We held three such meetings at local churches. They were well attended, with 50 to 100 people at each. About two-thirds of attendees were existing patients. We developed a 20-minute slide presentation to explain the basic idea behind the practice. After we made the presentation, we answered questions for 20 to 30 minutes. Enrollment pledges began to trickle in.

At the same time, we began preparing to provide free care to the uninsured (we refer to these patients as "recipients"). We wanted to offer our services to patients for whom other forms of financial assistance weren't available, so we met with the local directors of Medi-Cal (California's Medicaid program) and our county's Medically Indigent Adult Program and developed a simple checklist that we could use to confirm that a patient is not qualified for these or other government programs (e.g., Medicare or Veterans benefits).

Finally, we began to prepare the office itself. We decided on a modest 970 square feet space in a favorable location. We rolled the cost of our tenant improvements into a five-year lease. We selected an electronic health record (EHR), ChartWare, and began with very basic software programs for electronic patient management (Quicken and Microsoft Office). We financed the EHR and a simple computer network (one server with three desktop computers) over two years. A local medical supply company donated a significant amount of quality used equipment for startup. We were on our way.

One of the characteristics of his practice that Dr. Forester appreciates most is not being rushed during office visits. Most visits are at least 30 minutes long.

Successes and setbacks

As our grand opening neared, we spent many nights cleaning, painting and preparing our new office. When we opened our practice on Jan. 1, 2004, we had more than 250 benefactors prepaid for the first year's care. The local newspaper wrote two articles that generated community interest. We made about 30 presentations to service organizations throughout the community, but most important, our practice grew by word of mouth.

For the first three months, we strove to get every benefactor into the office for a comprehensive exam and entered into our EHR system. We worked out the bugs in our Web site messaging and scheduling system. Three months later we began offering services to the uninsured. After one year, we had more than 400 benefactors between us and had conducted almost 900 office visits for uninsured patients. We were able to pay all our expenses, and we each took home a net salary of $78,000.

During the next year, the practice grew. Our net incomes in 2005 were $178,000. Last year they were $177,000, plus we made $15,000 deferrals to our retirement accounts. As we finish our fourth year of operations, we have about 550 enrolled benefactors. Since our inception, we've conducted 6,250 uninsured office visits and provided $500,000 in free care.

Our benefactors have chosen our practice for a variety of reasons. Some of them had an established relationship with my partner or me. Some wanted to support us out of a concern for the uninsured. Some were techies who loved the idea of electronic messaging with their doctor and scheduling appointments online. Many business owners and business travelers appreciated our capacity to be flexible about their appointment times and to treat them promptly.

Regardless of what initially drew them to us, our benefactors seem to like St. Luke's. After the first year, we had a 96-percent re-enrollment rate. Our billings are a snap - we send out one statement in mid-November, and by Jan. 31, we have collected over 80 percent of the year's charges with no additional effort.

Our biggest unforeseen challenge was securing nonprofit 501(c)(3) status for our practice from the Internal Revenue Service (IRS). The IRS had rules for nonprofit community hospitals, nonprofit emergency rooms, nonprofit drug treatment and counseling centers, and nonprofit educational programs, but they claimed never to have come across a nonprofit medical office. Very few nonprofit medical organizations give even 10 percent of their care at no cost, but we were giving 50 percent. We were small and different, and the IRS seemed content to bury us in unrelenting paper work and requests for further information. Our local attorneys and accountant had done about everything they could do when one of our new benefactors, a local developer who wanted to assist our efforts to help the uninsured, offered to contact a friend who was the principal of a high-powered Washington law firm specializing in charitable and philanthropic works. We quickly sent them our documents for review, and they agreed to help. After a few more months corresponding with the IRS, we flew to Washington for a meeting with the IRS attorneys, addressed their concerns and hammered out the final details.

On Dec. 21, 2005, almost two years after the start of operations, we were granted nonprofit 501(c)(3) status retroactively to our date of inception. The principal of the law firm generously wrote off his fee, and the benefactor's family foundation paid the fees of the other two attorneys - all because they believed in our practice's mission.

I would encourage other practices that are interested in following this model to apply to the IRS for nonprofit status. Any physician who wishes to apply can cite this article as support that such a model exists. We would also be happy to provide any similar organization our IRS determination letter or other information related to our application process.

How we did the math

The following equations demonstrate how we calculated the number of benefactors we would need to enroll in our new practice and the average amount we would need to charge them to meet our revenue goal of $600,000 per year.

Number of available visits per year:

48 weeks/year x 4 days/week x 7 hours/day x 2 patients/hour x 2 doctors = 5,376 weekday visits/year (This number was rounded to 6,000 visits to account for weekend, holiday and after-hours calls.)

Number of benefactors we could accommodate per year:

3,000 benefactor visits/year ÷ 5 visits/benefactor = 600 benefactors (The remaining 3,000 visits would be used by uninsured patients.)

Average amount we needed to charge per benefactor:

$600,000 ÷ 600 benefactors = $1,000/benefactor

We then estimated the age demographic of our benefactors and developed our payment schedule:

Children < 19 years	$500/year
College students < 23	$500/year
Young adults < 35	$900/year
Adults 35 to 60	$1,200/year
Seniors > 60	$1,500/year

Practicing rewarding medicine

One of the greatest joys of St. Luke's Family Practice is taking care of people who have no other viable medical care option. Though at first we were intimidated treating those with uncontrolled diabetes and severe mental disorders as outpatients, with time and experience we became more comfortable doing so through close follow-up. Some of our most important and rewarding new referrals have come from local emergency departments and hospital discharge planners requesting that we provide outpatient follow-up for uninsured patients.

Perhaps I became soft after 14 years of middle- and upper-middle-class practice, but one of the things I have really appreciated about caring for the uninsured is seeing more significant pathology. When someone doesn't seek a doctor's care for 10 or 20 years and then suddenly feels an urgent need, the problem is usually significant. Over the past four years, we have made more than a dozen diagnoses of life-threatening diseases at treatable and curable stages among our uninsured recipients.

Through our experiences, we have also learned about other community resources we can work with to help patients get the care they need, such as medications, immunizations and cancer screening. A few colleagues in subspecialties provide phone consultations liberally and occasionally see our uninsured patients for a small fee or no charge. When a patient's medical needs become so acute as to require emergency or inpatient services, they are frequently covered by the emergency Medicaid benefits. (For more details about our practice, see "Answers to Frequently Asked Questions About St. Luke's Family Practice," page 16.)

answers to frequently asked QUESTIONS ABOUT St. Luke's Family practice

Q. Why have you focused on outpatient care for the uninsured?

A. Primary care cognitive services are not the biggest health care expense for patients; however, getting patients into the primary care doctor's office is often the first and most important step to better health care. Providing free care to the uninsured offers basic health care services to those who might not otherwise go to the doctor due to financial concerns.

Q. What procedures and services do you provide?

A. The lab tests we provide include urinalysis, microscopy, blood glucose, A1C, urine pregnancy and hematocrit. The diagnostic procedures we perform include ECG, spirometry, pulse oximetry, audiometry and PPD for tuberculosis. We also provide influenza and tetanus-diphtheria vaccinations, and corticosteroid, ceftriaxone, antihistamine and promethazine injections. Casting and splinting, as well as office "lump and bump" surgery, are also performed in-house. We pay for all the supplies and charge nothing for the service.

Q. What about payment for other labs and diagnostic studies?

A. Because we see patients more frequently and spend more time on the history and physical exam, we can sometimes order fewer lab tests. We send patients to the county facility to pay cash for labs (e.g., $15 for complete blood count, $30 for a comprehensive metabolic panel, $38 for a lipid profile). For radiographs, our patients get a 50-percent discount at a local radiology office for cash payment at the time of service. Most plain radiographs are $30 to $100. An upper GI runs about $120. Pelvic and abdominal sonograms run about $100 to $120. Most CTs are about $300 without contrast.

Q. How do patients get prescription medications?

A. Our practice strives for an evidence-based medicine approach that usually requires fewer and less expensive medications. We try to be price-sensitive when prescribing. A local pharmacy donates bulk medications (doxycycline, atenolol, metformin, hydrochlorothiazide and glyburide) that we divide into appropriate units and dispense free of charge. For medications with difficult substitutions, we provide limited pharmaceutical samples (e.g., thiazolidinediones, angiotensin receptor blockers, some antidepressants, atypical antipsychotics, nasal steroids). We also direct patients to a local pharmacy that offers selected prescription medications for $4. Additionally, we use patient assistance programs through the Partnership for Prescription Assistance (http://www.helpingpatients.org).

Q. Do you provide inpatient care?

A. We provide care at all sites for our benefactors - office, home, hospital, or rehab or skilled nursing facility as needed. We do not offer that same level of care for our recipients. It would take too much time away from outpatient care, which is what we feel we do best.

Q. How do you make sure recipients really don't qualify for other programs?

A. The county has a network of eligibility workers who work to sign up as many people as possible for Medicaid. Sometimes patients take advantage of our practice, but we concentrate our efforts where they can do the most good.

Q. Do the recipients pay anything?

A. The medical assistant asks recipients if they would like to make a donation at the end of their visit. If they ask us to suggest a donation amount and are from a working family, we suggest one hour's wage. On average, we collect about $12 per visit. The donations we receive from recipients are almost enough to pay our medical assistant's salary.

The payoff

Throughout our practice's creation and development, there have been trade-offs and challenges. Trying to practice medicine in the 21st century on a very limited budget can be difficult. But like anything else, our confidence and skills grow with practice. We no longer have to review insurance contracts, attend IPA meetings or scrutinize insurance aging reports.

One of the best parts of our practice model is that everyone who comes to St. Luke's wants to see us and hear our opinion. Without feeling rushed, we have the time to carefully listen to complaints, ask the necessary questions and perform thorough clinical examinations. We can fully utilize the Internet and electronic decision-making software to help us in real time. We also have time to call consultants and ask their advice as necessary.

We never could have created our practice without the initial inspiration, the support and confidence of our board of directors, our benefactors, our community and our families. After four years of success, we are glad we tried.

Send comments to fpmedit@aafp.org.

About the Author

Dr. Forester practiced in a conventional office for 14 years before co-founding St. Luke's Family Practice with Dr. R.J. Heck in 2003 in Modesto, Calif. Author disclosure: nothing to disclose.

End of quote!

For Physicians: How to Move to a Consumer Driven Practice and work on Reforming Health Care at the same time

2008-04-28T14:25:00.001-07:00

Simple Action Plan

We have been working more and more for less and less. We are being suffocated by ever increasing regulations, which usually turn out just to be new tricks to pay us less (e.g P4P). Many primary care colleagues are at the edge of viability of their practices. The demand for physicians is said to go up, some even talk about a "physician shortage", yet, in contrast to the most basic economical rules, our reimbursements continue to go down. We have lost 60-70% of our earning power since the 80's, a unique situation without precedent.

Patients perceive us as "rich", the media portrays us as making a most comfortable living in the top 5% of incomes.

The media also prefer to report on errors and scandals, on our weaknesses and failures rather than medical success.

For politicians we are part of the problem, not part of the solution. We have no friends in politics, since physicians only amount o 1% of voters. Americans in general consider us "rich" and "too expensive" and one congressman mentioned that "all health care problems would be solved if we could just get the doctors to be satisfied with 75,000 a year".

Insurances earn by not paying us or by delaying payments. They have successfully applied salami tactics for 20 years to reduce reimbursements.

The organisation that is meant to represent us, the AMA, has long bought into the status quo, has surrendered in every important issue and keeps busy tweaking minutia. The "solutions" the AMA offers are anemic and pathetic, and they lack the guts to confront the root problems.

We have no friends and we have no allies. Nobody will help us. If we want change, we will have to do it ourselves.

Always remember that we are the ones with the knowledge, the skills and the expertise! We do not need anyone to diagnose and to treat. Those who have pushed themselves into the patient-physician relationship do not know medicine, and they are only able to harass us, because we have signed contracts allowing them to do so. Without us, they are nothing!

We have to remember that we have signed the contracts that allow them to withhold, deny, restrict, control, demand pre-authorization, delay and defraud us. We can cancel these contracts. And, with the coming "shortage of physicians" there is no better time. We have to remove the control of medicine from the third party payers. And we have to do it ourselves. Fortunately, this is not hard and may even be not just rewarding, but fun.

Here is a simple action plan. The actions complement each other, each strengthens the other. The plan is flexible, you can start wherever you want and you can go as far as you want. Going just a little step is good for you, going far helps your colleagues as well. the more physicians participate, the larger the impact on health care overall will be.

After putting our personal finances in order, we take a close look at our practice and see which third party payers (and yes, that includes Medicaid and Medicare) are loosing propositions. We gradually, deliberately, smartly drop third party payers based on an economic analysis of our practices. This shrinks the networks of HMOs and reduces their power and market appeal. At the same time we unite into large groups working under one tax ID to bill together and negotiate together ("group practice without walls"). This increases our numbers and direct negotiation power with the remaining HMOs until we drop them too. At the same time we educate our patients about alternatives to HMOs, so that they favor more attractive options of insurance coverage, such as HSA, HRA, cooperatives, individual tax deductible health plans etc. We offer cash services at a very competitive price. We can do this since we would greatly benefit if we received the same amount of money in cash right from the patients - rather than from an HMO that pay us only after a lot of administration hoops, shenanigans, withholds and months of delay. "Carecredit" and other options may make it appealing to the patient. The more patients drop HMOs, the weaker they get. And finally, we talk to our colleagues about these issues to come to common concepts and understandings, to unite us. One of the possible ways to do this is Sermo, the physician-only online community founded in Cambridge in 2006.

This is the plan:

1. Get your personal finances in order first

Consider a fee-only financial advisor. Fee-only advisers are paid by the hour and consequently have less of a conflict of interest than advisers who live on commission. Go over your personal finances, make a long term plan and a mid-range plan. Determine how much income you need as a minimum, what kind of drop of income you can afford while you drop HMOs, and for how long. Initially your income may decrease when you drop the low paying plans, although it does not have to.
Secondly, talk to your partner to get his or her agreement. While dropping HMOs may reduce your income initially, this is temporary and it will to a greatly improved quality of life in the long run. It is essential to have the support of your partner during this time.
Consider postponing larger purchases that put you in debt such as a new car, new home etc. Don't fall for the myth that "doctors are rich and can afford luxury". Living above your means will chain you to the third party payers. Limit your luxury purchases and spend wisely in general. Limit your monthly payments (new car, renovation of condo or house etc).

2. Streamline your practice finances

Sit down with your office manager, your accountant and/or your billing service. Write a business plan! The business plan should include your mission is and your financial goals. Write into the plan what you want to earn on a monthly and yearly basis. Look at your overhead. Based on your planned revenue and your overhead you can now calculate what you have to collect, what you have to earn for each visit and what you have to earn for your most common services. Note those figures. This is a standard business process that astonishingly is not done by many physicians.

Now make a spreadsheet with the ten most common procedures or services in your field. List what each third party payer reimburses you for these services. Calculate which payers will allow you to reach your business goal and which payers do not! Plan to drop the payers that do not allow you to reach your business goal! This is a crucial step.

You may also calculate what each third party payer contributes to your overall collections to help you with the decision about which payer to keep and which ones not to keep. Calculate the average payment for each visit from each payer. Consider the number of patients from each payer. Calculate the accounts receivable for each payer - as a fraction of the charges after 30 days and after 60 days. That informs you about their delays and denials, about the hassle and sleaze factor. Decide which third party payer makes no sense economically and also which payer gives you the most hassle.

3. Drop third party payers that threaten your financial viability

A colleague wrote the following: "I started with the lowest paying HMOs. It is a 2 year process. First I stop taking any new patients from that HMO. Then 1 year prior to dropping them, I will send out a letter to the patients with that insurance informing them that I will be dropping that insurance the following Jan. I send out this letter with the labs that I send to them prior to their physicals. They come in for their physical and they have the opportunity to ask me why I am dropping their plan. I inform them. I tell them which plans I will be taking and that they can still see me if they have out of network benefits. I would say that most patients change insurance or continue out of network with me."

Send certified return receipt cancellation letters to those third party payers that drag your practice down. It is likely not feasible to drop all third party payers at the same time. Start small, gain experiences, then drop more. Remember that you are not "abandoning patients", you are merely becoming an "out of network physician". You are supporting HSAs and high deductible insurances. You are moving your practice towards "consumer directed health care" or towards "cash medicine" or towards concierge medicine". Promote HSAs coupled with high deductible health plans (also called catastrophic coverage) to your patients by several means, such as those described in Neil Baum's book. We will talk about this more later.

The following two books are extraordinary useful and well written: "Think Business" by Owen Dahl, $69, a kind of mini-MBA for physicians written by a veteran of medical management, and "Marketing your medical practice" by Neil Baum, $89, a fantastic book by a successful urologist in private practice. And of course there is "Medical Economics" magazine....

Legal disclaimer: Do not coordinate this purely economical plan with your colleagues, since this might be misconstrued as a "conspiracy". In the past acting as a group to flex our muscle or to influence prices was deemed illegal for physicians, since it might "worsen patient access to health care" or "might increase prices" - something that actually never happened. This was ruled "illegal", since obviously the consumer is a higher priority than physician income or influence. This is a hidden compliment and an acknowledgment of our power.

Therefore do not write emails or letter about this using any other terms than "purely economical reasons" and "supporting consumer driven health care" and use only verbal communication in private places. And understand that this is NOT done to fix prices in any way, but to move the health care system to "consumer driven" - a system that offers maximum transparency, and uses market forces to deliver cost effective, affordable, high quality medicine to everybody. Consumer should call the shots and not the insurance, and therefore consumers should holds and control the money and not the insurances. That is why we are moving away from insurances, to empower consumers.
And we are obviously doing this based on purely economical thinking. We "think business", something that we have learned from just those HMOs - remember?

Should anyone threaten, bring up or even hint at us doing something "illegal" or "conspiring", go to the media and show how this person or entity wants to cheat the consumer and wants to prevent the consumer from being in charge! Consumer driven health care is the ultimate democratic health care system and should be supported by everybody! Nobody will dare object to our move in that direction!

Stop taking new patients 2 years prior to dropping the plan because it is often the case that many other doctors are dropping the same plan. You may have a rush of new HMO patients because the panel of that insurance is drying up. It is harder dropping an HMO which is 30% of your practice than 15%.

Inform the patients a year in advance because many insurance plans require the employee or employer to sign up for the following year 6 months or more before the end of the year.

Fortunately, the amount of physicians that show third party payers the door and still provide affordable health care are increasing. More and more of us are moving towards something between consumer driven and concierge care.

Here is a very interesting article from the American Academy of Family Physicians that publishes on this: The "Robin Hood Practice". Very fitting name, since Robin Hood stood up against the evil Sheriff and...won. http://www.aafp.org/fpm/20080200/12anew.html

4. Join or create a "Group Practice Without Walls"

This is the solution when you are faced with one or two dominating HMOs in your area holding 40 plus percent market share, which makes it very hard to cancel their contracts. This is a good solution for colleagues who prefer to have someone else handle the business aspects of medicine and for those who prefer to be employed.

Group Practice Without Walls means the physician continues to practice in his/her own facility, yet is part of a group, just not under one roof. The group does marketing, billing and collections, sometimes, but by now means necessary, also staffing and management. All members have the same tax ID. This way a large number of apparently independently practicing physicians can represent themselves as one group, buy and negotiate as one group, with the obvious advantage of using your larger numbers. The laughter of HMOs about you will become a lot softer.

I have seen this work very well in in a group of 100 plus ObGyn and Gyn physicians, to which I was introduced by chance in 2002. Since then I have spoken with half a dozen members since and they seem most satisfied with this model. Some of the points mentioned here apparently are off as I was told recently and I would be happy to correct them. But, in summary, it is an excellent model, it works and it is reality.

Joining this group gives an ObGyn reimbursements of about twice Medicare/Medicaid. For example: global fee for prenatal care, delivery and postpartum care yields $1500 from Medicaid, and members of this group receive around $3000. Same amount of work, probably even less for a non-Medicaid patient. Members of this group work in their own private offices, with their own staff, own equipment and rooms, mostly following their own clinical guidelines and decisions, own budget, own finances etc. Except: they bill together and negotiate together under one tax ID. They pay about 5% of collections for billing. Members pay an admission fee for admission to the group and would have to pay a fee when leaving the group.

The management of this group negotiates with the remaining HMOs and frequently fires the lowest paying third party payer. They achieve reimbursements of 120 to 200% Medicare. These groups can be set up so that the individual practice is an LLC within the larger LLC of the group. Billing goes through one single entity. They pool some labs and technical services such as Xray, mammography, ultrasound, bone density, but also cosmetic services, such as botox, epilation, vein therapy etc

How do you set it up? You first spread the word among the best doctors and the key players in the area offering to join you. Then you retain an attorney experienced with formation of such as group. this is expensive, but worth it in the end. You must stand up to anti-trust scrutiny. Your ultimate goal is to attract enough doctors to reach enough critical to have negotiating power, but not as many to violate anti-trust laws. Consider staying under 50% of physicians in your specialty in the area. This may take several years, but is well worth it.

5. Get support from your patients

The transition towards consumer driven health care (and away from HMOs and third party payers) will be much easier with patient support. There is a profound lack of knowledge about consumer driven health care, high deductible insurance plans (HDHP) and Health Savings Accounts (HSA). Once we help our patients understand these issues, they will help us in the transition to more economic and more responsible care!

Learn: buy a HSA/HDHP for your own employees and your family. Browse the most educational and easiest to understand websites on HSAs. Summarize the info into a one half page note. Post this in your office, hand out leaflets to your patients, leave them in your waiting room, post it on your website, in your monthly newsletter, email it to friends and colleagues, drop in mailboxes of other docs in your hospital. Ask your hospital HR to offer them, give a talk at the hospital and at the local chamber of commerce. Write a blog. Create a Google Alert on "HSA". Read and lay out Regina Herzlinger's book "Who killed health care" in your waiting room.

Teach: Educate your patients that they might save 30-40% of coverage costs, that HSAs are funded with pre-tax dollars, that they own those dollars, that they roll over to the next year and may collect interest!

Even Medicare has Medical Savings Accounts available during the current enrollment! A huge benefit - it eliminates the need for MediGap coverage.

HSAs teach the patient accountability and are the only solution to ever increasing health care costs.

Act: Offer cash services for your patients with HSAs! Patients need to know what to do with their HSAs!! Post a list of prices for your 10-20 most common services. You could even post a comparison list with the prices of a local plumber, electrician etc for comparison - an eye-opener!

Direct patients to the cheaper HDHP providers that actually save money. Traditional HMOs may price these plans so that they become less attractive. Tell your patients that every bank can administer a HSA.

Links: AMA brochure... http://www.ama-assn.org/ama1/pub/upload/mm/363/hsabrochure.pdf
and http://www.ama-assn.org/ama1/pub/upload/mm/372/i-05cmsreport3.pdf
US Treasury Dept...http://www.ustreas.gov/offices/public-affairs/hsa/

Consumers for Health Care Choices is a national membership organization, chaired by a former president of the American Medical Association. http://www.chcchoices.org /Greg Scanlen, greg@chcchoices.org, tel:301-606-7364

Politicians, blissfully unaware of true details of health care, may claim that consumers actually do not know enough about and are "not smart enough" and not "educated enough" and "too weak" or "need protection" from all the other players in health care - and that of course, the "government knows best" and has only the best intentions and the best advice for consumers.

"Hi, I am from the government and I am here to help you"

A well designed HSA can save 30-40% on total coverage costs, including the HSA contribution. Further, this contribution is not lost, but owned by the individual, is rolled over into the next year and may collect interest. For the 80+% of us who are basically healthy, HSAs are a great deal. For those that are chronically ill, it is a wash. Employers like HSAs because they save money for the employer. HSAs have proven to decrease costs. Taking all risk away from the patient leads to overuse of resources because it is a lot easier to spend the insurer's money than your own money.

The vast majority of transactions can occur with a debit or credit card at point of sale, no need to file a claim.
Currently, pre-tax HSA dollars can be spent according to IRS section 213(d) which defines healthcare broadly as anything therapeutic, including "alternative medicine" or chiropractic care, while cosmetic surgery is not an "allowable expense"

The opposition to HSAs takes several forms:
1. Only the well-off can afford them
2. People with HSAs will see them as just another investment scheme, and will avoid needed medical care (including essential screening) to "save" this retirement money.
3. We have 4 or 5 generations of consumers / patients in the US who don't have a clue how much their insurance / Medicare is really paying, and will be shocked back to the old ways when they get their bills.
4. Unless they are combined with a cash-for-care schedule of lower payments (less hassle, less paperwork, lower charge) there is not much advantage to having an HSA.
HSAs would actually work great in a "health care cooperative", where physicians AND their patients unite and truly work together to combat their common enemy, disease.
Big opposition will come from HMOs, since they have the most to loose. Pharma is lobbying for a "carve out" of drug costs from the HSA dollars. If patients know the actual cost of drugs, they will prefer generics and "Direct to consumer advertising" will tank.

Unfortunately, most physicians are not offering cash services. We all should post a list of our services for cash payers - independent to the fact if we take HMOs and or Medicare / Medicaid etc. Just good business sense. You inform the patient, you give them an option and you get them thinking in the right direction.....hm, this is what it costs....with all the ramifications, such as why is my insurance so expensive or so cheap, could I afford this on my own without insurance? and so on

Educate your patients about alternatives to insurance, mention HSAs and high deductible plans. The AMA has leaflets on this.

Patients often think that we receive all the money they pay to their insurance. They assume we make millions. It often is an eye-opener that we receive about the same amount the HMOs keep for their administration (withholding and denying) and they are often very surprised to find out how little we get paid for services. It is incredible effective to create a list comparing our services point by point with the services and prices of an electrician or plumber - and you will find that they come out ahead! This creates sympathy from the patients and the willingness to drop HMOs

6. Get support from your colleagues

Previously we had recommended to put your own finances in order to be able to survive for a while with less income, then approach your practice from a business point of view: first establish how much you want to earn, calculate what each payer has to pay for your most common services and then drop those HMOs that do not meet your business needs. When Jack Welsh was CEO of GE her routinely dropped the two least profitable lines of business. Do the same with third party payers. This is plain economic thinking, and obviously not a plan to boycott third party payers. Start or join a group practice without walls. Encourage patients to enroll in HDHP / HSAs instead of conventional HMOs. This saves our patients money, allows them to accrue savings tax free, while paving the road for cash practice for us.

The last component is to spread the word to as many physicians as possible! Encourage your colleagues to join Sermo, to join our discussion. This way we can learn form each other how to save the health care system. Let them participate and contribute to our discussions. Keep talking about health care reform, stay in touch, write a blog, read about the issue, email a summary of the plan to friends and colleagues, drop a flyer in mailboxes of your colleagues at the hospital. Just invite them to Sermo, maybe the AAPS, the rest will follow!

Unfortunately, the AMA has given up any attempt of true representation. I am very upset that they have good ideas such as supporting HSAsand tax credits, just to be completely quiet about it! What are they thinking?

Follow the plan for yourself and it will be very helpful. Tell your colleagues about it, spread the word and the effect will multiply!

Curb Your Enthusiasm For The Canadian System

2008-04-26T07:08:00.000-07:00

POsted on the taxpayerblog by Lee Harding at 1:15 PM on Tuesday, February 12, 2008

The umpteenth survey has confirmed what politicans refuse to face: citizens want health care reform. Pollara's 10th Health Care in Canada Survey not only shows citizens want change, it shows health care professionals also want it. "Sixty-nine per cent of nurses felt the system needed significant change, while 62% of doctors favoured 'some fairly major repairs.'"

HEALTH CARE CHECKUP
Health Care in Canada Survey highlights:
- 68% of Canadians think the system needs major repairs or complete rebuilding.
- 57% of Canadians rate their health as good or excellent.
- 57% feel they are receiving quality health care.
- 37% of Canadians reported being diagnosed with a chronic illness.
- 48% believe access to good quality, timely health care will improve in the next five years.
- 49% think access to family doctors has worsened.
- 30% strongly support giving Canadian access to private clinics if wait times guaranteed for certain procedures aren't met in the public system.

Capitalism is not the cause of America's health care problems, it is the cure

2008-04-26T06:53:00.001-07:00

I LOVE this book, it "feels" right. It is written by a Canadian physician that trained in his own country, is most familiar with his local health care system, and who later moved to the US. He has a clear view of the amazing development of medicine in the last century and now is a senior fellow at the Manhattan Institute. His own thinking evolved from the support of HillaryCare as a medical student to promoting individual chocie and competition today. The foreword is from none other than Milton Friedman

The book is "The Cure". David Gratzer writes well, and his style is easy to read. Here a few quotes:

" as public opinion and reform efforts in Canada were moving towards more privatization, in the US they have been moving in exactly the opposite direction. As I have worked in both countries, I am unsettled to see mistake made north of the 49th parallel repeated in the south. The direction of American Health care reform is eerily familiar. It's like watching a car accident unfold in front of me: a series of small events, leading to a spectacularly disastrous end"

"In Chapter Three I argue that four decades of reform have failed because they have been premised on two bad ideas, one favored by Democrats, the other by Republicans, and both worsened the problems they were intended to solve." Medicaid and Medicare on one side and the HMOs on the other side. "Both visions have now lost it's luster. America's health care policy is now akin the Eastern Europe's political terra incognita after the collapse of the Berlin Wall; Everyone knows that it doesn't work, but no knows how to proceed. The crisis will only deepen until we find a third way between the Scylla of big government and the Charybdis of bureaucratic HMOs. "

"If America can lead the world in medical innovation, it should also be able to rethink it's health Care system.America has reformed other sectors of its economy that once appeared in crisis. In telecommunication, in banking and in other sectors, this transformation has meant deregulation and increased reliance on market mechanisms. Health care is the exception. Is it any wonder that Americans are dissatisfied? Could it be any clearer what must be done?

Health Care stands at a crossroads. If we stay mired in an economic model from the World War II era, government's role will keep growing, costs will continue to swell and Americans will eventually see the kind of rationing that has afflicted Canada.....If however Americans unleash the market forces that have transformed five sixth of their economy, if they choose more choice and more competition, then American health care will become cheaper, better and more accessible for everyone.

Capitalism is not the cause of America's health care problems, it is the cure"

Everybody should read this book. Dr. David Gratzer, "The Cure. How Capitalism Can Save American Health Care" Foreword by Milton Friedman. Encounter Book $17.95

2008-03-24T12:42:00.001-07:00

“Pragmatic” Health Care Reform?
posted by Michael D. Tanner on the CATO blog

The Washington Post has a story today gushing over how “pragmatic” and “moderate” Democratic presidential candidates are being in pursuit of universal health care. Moderate in comparison to Michael Moore maybe, but let’s look at what those candidates are actually proposing:

1) An individual mandate requiring every American to purchase a specific government-designed insurance plan or face financial penalties. (Edwards and Clinton). Such a mandate, however unenforceable in practice, is an unprecedented (except for Massachusetts) infringement on individual liberty and sets the stage for further regulation of the insurance industry.

2) A “play or pay” mandate on businesses, requiring them to provide employees with health insurance or pay additional taxes (Obama, Edwards, Clinton). Such a mandate would raise the cost of employment resulting in a loss of jobs and lower employee compensation.

3) A government-mandated minimum benefits package for insurance (Obama, Edwards, Clinton). Rather than true insurance—spreading catastrophic risk—the government would require a “Cadillac” policy, leading to a feeding frenzy for special interests representing providers and disease constituencies.

4) Community rating and guaranteed issue, raising the cost of insurance for young and healthy individuals. (Obama, Edwards, Clinton).

5) Price controls on insurance premiums (Obama) and prescription drugs under Medicare (Obama, Edwards, Clinton).

6) Huge tax increases, ranging from $65 billion per year (Obama) to more than $120 billion per year (Edwards).

7) Massive expansion of government health care programs like Medicaid (Obama, Edwards, Clinton). Edwards would also create a new government-run health care program like Medicare to compete with private insurance.

8) Managed-competition-style regional insurance pools or “connectors.” (Obama and Clinton).

The fact that Massachusetts governor Mitt Romney and the Heritage Foundation also support many of these proposals doesn’t make them any more moderate. These proposals would radically increase government control over one seventh of the US economy, would increase taxes, destroy jobs, and slow economic growth, and most importantly would lead to worse health care for millions of Americans.

posted by Michael D. Tanner on 07.10.07 @ 9:50 am

The Anti-Universal Coverage Club Manifesto

2008-03-24T12:25:00.000-07:00

I found the following quote on the blog of Cato and I find it very interesting.

The Anti-Universal Coverage Club is a list of scholars and citizens who reject the idea that government should ensure that all individuals have health insurance. It exists to challenge the idea that “universal coverage” is the best way to protect and promote health.

The following principles explain the club’s opposition to “universal coverage”:

Health policy should focus on making health care of ever-increasing quality available to an ever-increasing number of people.

“Universal coverage” could be achieved only by forcing everyone to buy health insurance or by having government provide health insurance to all, neither of which is desirable.

In a free society, people should have the right to refuse health insurance.
If governments must subsidize those who cannot afford medical care, they should be free to experiment with different types of subsidies (cash, vouchers, insurance, public clinics & hospitals, uncompensated care payments, etc.) and tax exemptions, rather than be forced by a policy of “universal coverage” to subsidize people via “insurance.”

To join, post something to your blog or email me here. If you blog about the club, pro or con, please send the link to that address as well.
posted by Michael F. Cannon on 07.06.07 @ 4:33 pm

Canadians face long waits for many kinds of health care

2008-03-19T13:17:00.000-07:00

This one is for all these dreamers who want to socialize a whole sector of the American economy:

JEFFREY NACHT, M.D.Published: December 9th, 2007 01:00 AM at http://www.thenewstribune.com/opinion/insight/story/224748.html

As a half-time practicing orthopedic surgeon in Tacoma and a half-time faculty member in the Department of Medicine at the University of British Columbia in Vancouver, I have come to appreciate the differences of these two health care systems, both of which are often touted as the very best.

As I have spent more time in Canada, I have started to appreciate the way its system affects doctors and their patients. The revelations have been nothing short of astonishing.

We hear a great deal about how much less Canadians spend on health care and what a wonderful system they have where everyone has access to “universal health care.” But how they accomplish this is not exactly as advertised.

According to no less a source than the World Health Organization, Canadians, for the price they pay, now have the worst health care system in the world. WHO ranks Canada’s health system as the third-most expensive system in the world, and rates it 30th in efficiency and 18th in access to care.

How does this affect its physician work force? The answers might shock you.

Surgeons are “controlled” by limiting access to operating rooms. In British Columbia, all elective operating rooms shut down at 3 p.m., except at Vancouver Hospital (the tertiary care center for all of the province), which shuts down at 5 p.m. except for emergencies.

Surgeons are given a very limited number of surgical “block times” in which to do their work. Younger surgeons get less time, and senior surgeons get the prime slots, just as in Britain. Each surgeon has a waiting list or “queue.” When a surgeon does an emergency case, the patients on his waiting list are pushed back by one slot for each emergency he does. That way the hospital’s budget for the number of surgeries it must pay for is not impacted by unexpected additions to the schedule.

Patients often try to call in favors or use their influence with their surgeon to find ways to “jump the queue” or move up in the list. Waiting times can be shocking.

In most major metropolitan areas, a patient will usually wait for nine to 12 months for a smaller procedure such as carpal tunnel surgery or a hernia repair, and 14 to 18 months for a major procedure such as a total joint replacement or cardiac valve replacement.

Somewhat more urgent cases do not fare much better. My wife’s aunt developed symptomatic coronary artery disease a few years ago. She was referred to a cardiac surgeon at Vancouver Hospital, who recommended that she have a two-vessel bypass. He put her on the “wait list” and estimated that she would have her surgery in eight months.

Because of emergencies that kept adding delays to his “elective” schedule, the aunt finally had her surgery 18 months later. By that time, she was virtually a cardiac cripple and required a four-vessel bypass. Due to her severely deteriorated condition by the time she got to surgery, she did not survive.

My Canadian father developed a large abdominal aortic aneurysm when he was about 70. He was referred to a vascular surgeon, who scheduled him for repair of the aneurysm nine months later. He finally had his surgery 13 months after the decision for surgery was made. Three times he was admitted to the hospital for the surgery and sent home when an emergency bumped him off the schedule.

Imagine how that would work here in our community.

To make matters even more difficult, the provincial government started additional budget-cutting measures a few years ago, dictating that half of the elective operating rooms in the entire province close for eight weeks each year to save money. Each hospital was allowed to choose which eight weeks it would close.

Economic decisions like these are based on the fact that for hospitals, patient care is a liability that must be limited whenever possible to remain within their budget, not a source of revenue as it is here in the U.S. This turns the equation of health care economics upside down and leads to the worst kind of rationing.

Internists and primary care physicians have another set of issues. The government limits how many patients each doctor can see and bill for each day. If you exceed the government’s quota, you simply won’t get paid for the additional work.

However, there is a work-around. Many physicians do their office practice and quit when they see their “limit.” They then travel to another community and work in an urgent care or after-hours clinic. As long as it is in another municipality (an outlying community with a health care need) they can bill additionally and get paid. This often means traveling 50 miles or more to work in a clinic distant enough to circumvent the quota rules.

Similarly, services are often limited by available resources. There are only a few MRI machines in the whole province, so the waiting list for these studies can be six to 12 months. CAT scanners and ultrasound units are more readily available and might only take a few weeks to schedule.

In the Foot and Ankle Reconstruction Centre in Vancouver, I work alongside three full-time orthopedic specialists who do most of the complex surgery of this type for all of southwestern British Columbia, which has a population base of about 2 million people. These poor guys have a waiting list of over 5,000 patients who need surgery. Their waiting list for elective cases exceeds three years.

So how do Canadians like their health care system? Surprisingly, most think it’s great, at least until they need access to care. There is a pervasive socialist mentality that most Canadians subscribe to. Even though there are long waits and limited available high-tech services, at least everyone waits the same amount of time.

There is no deductible or co-pay, so when patients do need care, it’s essentially free. Canadians do pay for health insurance, but the premiums are graduated, based on income, and even the highest premiums are only a fraction of what Americans pay for private insurance. If you make less that modest income, your premiums are waived altogether.

However, you can’t access care outside of the system. Tiny pockets of “private health care” have emerged here and there. However, these centers take no government payments; it’s cash only. They treat primarily workers’ compensation and “third party injury” cases, as well as patients from outside the province.

So do Americans really want this type of system? More pertinently, do American doctors want to work in this environment?

The answer, once you’ve looked at the dirt swept under this rug, is likely to be absolutely not.

The Myths of Single-Payer Health Care

2008-03-17T06:29:00.000-07:00

I found this on the net. It is so good that I am posting it here as a full, complete copy. I agree 100%. This is something everybody needs to know!

Itw as written and published by
By David Hogberg (about)

Begin quote:

A single-payer health care system is one in which a single-entity -- the government -- collects almost all of the revenue for and pays almost all of the bills for the health care system. In most single-payer systems only a small percentage of health care expenses are paid for with private funds. Countries that have a single-payer system include Australia, Canada, Sweden and the United Kingdom.

Single-payer is popular among the political left in the United States. Leftists have emitted tons of propaganda in favor of a single-payer system, much of which has fossilized into myth.
Here are some of the more prominent single-payer myths:

· Myth No. 1: Everyone has access to health care a single-payer system.
· Myth No. 2: Claims of rationing are exaggerated.
· Myth No. 3: A single-payer system would save money on administrative costs.
· Myth No. 4: Single-payer will provide fair and quality care for everyone.
· Myth No. 5: Single-payer leaves medical decisions to patients & doctors.
· Myth No. 6: Single-payer systems achieve better health outcomes.
· Myth No. 7: The U.S. systems also engages in rationing.
· Myth No. 8: A single-payer system will not hamper medical research.
· Myth No. 9: Single-payer will save money as patients seek care earlier.
· Myth No. 10: The free market in health care has failed in the U.S.

Myth No. 1: Everyone has access to health care a single-payer system.

Everyone in a single-payer system has health insurance, not necessarily health care.
While the government in a single-payer system will pay for everyone's health care, it limits the access to health care. In a single-payer system, citizens often believe that "the government" is paying for their health care. When people perceive that someone else is paying for something, they tend to over-use it. In a single-payer health care system, people over-use health care. This puts strain on government health care budgets, and to contain costs governments must ration care.

Governments in a single-payer system ration care using waiting lists for surgery and diagnostic procedures and by canceling surgeries. As the Canadian Supreme Court said upon ruling unconstitutional a Quebec law that banned private health care, "access to a waiting list is not access to health care." [Back to Top]

Myth No. 2: Claims of rationing are exaggerated.

Jonathan Cohn, author of Sick, wrote that the "stories about [rationing in] Canada are wildly exaggerated." Yet advocates of single-payer never say what they mean by "exaggerated."
The fact is that people often suffering great pain and anxiety while they spend months on a waiting list for surgery. Others spend months waiting for a surgery, only to have it cancelled, after which they will spend even more time waiting for another surgery. Sometimes people even die while on the waiting list.

Media in foreign nations are full of stories about people suffer while on a waiting list. In Canada, Diane Gorsuch twice had heart surgery cancelled; she suffered a fatal heart attack before her third surgery. In Great Britain, Mavis Skeet had her cancer surgery cancelled four times before her cancer was determined to have become inoperable. In Australia, eight-year-old Kyle Inglis has lost 50 percent of his hearing while waiting nearly 11 months for an operation to remove a tumor in his ear. Kyle is one of over 1,000 children waiting over 600 days for ear, nose and throat surgery in Warnbro, a suburb in Western Australia.

These are not mere anecdotes. Much academic literature has examined the impact of waiting lists on health. A study in the Canadian Medical Association Journal found that 50 people died while on a wait list for cardiac catheterization in Ontario. A study of Swedish patients on a wait list for heart surgery found that the "risk of death increases significantly with waiting time." In a 2000 article in the journal Clinical Oncology, British researchers studying 29 lung cancer patients waiting for treatment further found that about 20 percent "of potentially curable patients became incurable on the waiting list." [Back to Top]

Myth No. 3: A single-payer system would save money on administrative costs.

Single-payer advocates often claim that the U.S. private sector health care system is wasteful, spending far more on administrative costs than do government-run single-payer systems. According to single-payer advocates David Himmelstein and Steffie Woolhandler, "Streamlining administrative overhead to Canadian levels would save approximately $286.0 billion in 2003, $6,940 for each of the 41.2 million Americans who were uninsured as of 2001."

Yet comparisons of private sector administrative costs with those of government are misleading. Many government administrative expenses are excluded in such comparisons, such as what it costs employers and government to collect the taxes needed to fund the single-payer system, and the salaries of politicians and their staff members who set government health-care policy (the salary costs of executives and boards of directors who set company policy are included in private sector administrative costs).

But even if the U.S. would save money on administrative costs by switching to a single-payer system, the savings would prove temporary. The main cause of rising health care costs is not administrative costs, but over-use of health care. A single-payer system would not solve that problem. Indeed, it would make it worse. [Back to Top]

Myth No. 4: Single-payer will provide fair and quality care for everyone.

Leftist Dave Zweifel claims that the U.S. "could make the system so much more fair by enacting a national single-payer health plan." Jonathan Cohn, when asked why he had faith that the government could run the health care system for all when it didn't do it very well for the poor, responded, "My answer is that they do it, and do it well, abroad."

Well, no they don't. According to Canada's Fraser Institute:

... a profusion of research reveals that cardiovascular surgery queues are routinely jumped by the famous and politically-connected, that suburban and rural residents confront barriers to access not encountered by their urban counterparts, and that low-income Canadians have less access to specialists, particularly cardiovascular ones, are less likely to utilize diagnostic imaging, and have lower cardiovascular and cancer survival rates than their higher-income neighbours.
It isn't much better in Great Britain. Take a look at the Saga 'Good Hospital Guide' for British hospitals. Compare the ones in Inner London, which tend to be in wealthier areas, to the ones in Outer London, which tend to be in poorer areas. You'll notice that in general, the ones in Inner London have more doctors and nurses per bed, shorter wait times for MRIs and hip replacements, and lower mortality ratios. [Back to Top]

Myth No. 5: A single-payer system will leave medical decisions to a patients and his or her doctor.

According to Physicians for a National Health Program (PNHP), a group pushing for a single-payer system in the U.S.:

There is a myth that, with national health insurance, the government will be making the medical decisions. But in a publicly-financed, universal health care system medical decisions are left to the patient and doctor, as they should be. This is true even in the countries like the UK and Spain that have socialized medicine.

Yet PNHP seems to be talking out of both sides of its mouth. Here is how PNHP addresses the question of how to keep doctors from doing too many procedures in a single-payer system:
[Doing too many procedures] is a problem in systems that reimburse physicians on a fee-for-service basis. In today's health system, another problem is physicians doing too little for patients. So the real question is, "how do we discourage both overcare and undercare"? One approach is to compare physicians' use of tests and procedures to their peers with similar patients. A physician who is "off the curve" will stand out. Another way is to set spending targets for each specialty. This encourages doctors to be prudent stewards and to make sure their colleagues are as well, because any doctor doing unnecessary procedures will be taking money away from other physicians in the same specialty.

In practice what this will mean is medical decisions will be left up to you and your doctor as long as your doctor isn't doing too many (or too few) procedures and is within a spending target.
The truth is that single-payer systems often interfere with treatment decisions. For example, most single-payer systems have bureaucracies that delay the approval of new drugs, preventing patients from using them. Alice Mahon, a former member of the British parliament, needed the drug Lucentis to slow her macular degeneration. Because of delays due to the National Health Service not yet having approved Lucentis at the time of her diagnosis, Mahon lost much of the sight in her left eye.

In 1999, Canadian patient Daniel Smith, a cystic fibrosis sufferer, and his doctors agreed that he needed a lung transplant. But his surgery was cancelled by administrators because an open hospital bed could not be found.
So much for medical decisions being left to patients and their doctors. [Back to Top]

Myth No. 6: Single-payer systems achieve better health outcomes.

Most single-payer advocates point to life expectancy and infant mortality as evidence that single-payer systems produce better health outcomes than the U.S. And, indeed, the U.S. has lower life expectancy and higher infant mortality than many nations with a single-payer system.
The problem is that life expectancy and infant mortality tell us very little about the quality of a health care system. Life expectancy is determined by a host of factors over which a health care system has little control, such as genetics, crime rate, gross domestic product per capita, diet, sanitation, and literacy rate.

The primary reason is that the U.S. has lower life expectancy is that we are ethnically a far more diverse nation than most other industrialized nations. Factors associated with different ethnic backgrounds -- culture, diet, etc. -- can have a substantial impact on life expectancy.

A good deal of the lower life expectancy rate in the U.S. is accounted for by the difference in life expectancy of African-Americans versus other populations in the United States. Life expectancy for African-Americans is about 72.3 years, while for whites it is about 77.7 years. What accounts for the difference? Numerous scholars have investigated this question. The most prevalent explanations are differences in income and personal risk factors. For example, one study found that about one-third of the difference between white and African-American life expectancies in the United States was accounted for by income; another third was accounted for by personal risk factors such as obesity, blood pressure, alcohol intake, diabetes, cholesterol concentration, and smoking and the final third was due to unexplained factors.

Infant mortality is also impacted by many of the same factors that affect life expectancy -- genetics, GDP per capita, diet, etc. -- all of which are factors beyond the control of a health care system. Another factor that makes U.S. infant mortality rates higher than other nations is that we have far more pregnant women living alone; in other nations pregnant women are more likely to be either be married or living with a partner. Pregnant women in such households are more likely to receive prenatal care than pregnant women living on their own.

Perhaps the biggest drawback of infant mortality is that it is measured too inconsistently across nations to be a useful measure. Under United Nations' guidelines, countries are supposed to count any infant showing any sign of life as a "live birth." While the United States follows that guideline, many other nations do not. For example, Switzerland does not count any infant born measuring less than 12 inches, while France and Belgium do not count any infant born prior to 26 weeks. In short, many other nations exclude many high-risk infants from their infant mortality statistics, making their infant mortality numbers look better than they really are.

In areas where a health care system does have an impact, such as treating disease, the U.S. outperforms single-payer systems. For example, the U.S. has a higher five-year survival rate for victims of heart attacks than Canada, due to the fact that we do more bypass surgeries and angioplasties in the U.S. Hospitals in the U.S. also commit fewer errors than hospitals in countries with single-payer systems like Australia, Canada, New Zealand, and the United Kingdom. [Back to Top]

Myth No. 7: The U.S. systems also engages in rationing - 18,000 people die each year due to lack of insurance.

According to PNHP, "Rationing in U.S. health care is based on income: if you can afford care you get it, if you can't, you don't. A recent study by the prestigious Institute of Medicine found that 18,000 Americans die every year because they don't have health insurance."

The Institute of Medicine study purporting to show that 18,000 people die each year due to a lack of health insurance is actually a "meta-analysis," a study that summarizes the results of other studies. Yet many of the studies the Institute relied on have some rather odd results. One study in the New England Journal of Medicine found that women with private insurance were more likely to survive breast cancer than those uninsured. However, data in the study also showed that those who were uninsured had a higher survival rate than women covered by Medicaid. This suggests that factors other than health insurance, like education and income, were at play in determining breast cancer survival.

Furthermore, everyone in the U.S. can get care regardless of income. In 1986 the U.S. Congress passed the Emergency Medical Treatment and Active Labor Act. This requires emergency rooms to treat any person who shows up seeking medical treatment, regardless of their ability to pay. [Back to Top]

Myth No. 8: A single-payer system will not hamper medical research.

The PNHP claims:
Medical research does not disappear under universal health care system. Many famous discoveries have been made in countries that have national health care systems. Laparoscopic gallbladder removal was pioneered in Canada. The CT scan was invented in England. The new treatment to cure juvenile diabetics by transplanting pancreatic cells was developed in Canada.
While it is true that medical research will not "disappear," it will surely decline. Consider what has happened to pharmaceutical research in single-payer systems, where the government imposes price controls on prescription drugs. A study (PDF) conducted by U.S. Commerce Department found that drug price controls in other nations reduced annual investment in pharmaceuticals by $5-8 billion, resulting in 3 to 4 fewer drugs being launched each year. The Boston Consulting Group found (PDF) an even bigger effect of price controls, showing a loss of $17-22 billion annually in pharmaceutical research resulting in the loss of 10 to 13 new drug launches.

In a free market, producers make a profit by providing services that consumers find useful. Profits also act as a signal to research - research dollars go toward services that make more profit. This is desirable because services that make more profit are the ones that consumers find most useful. Medical services that make profit -- i.e., the ones that patients find most useful -- will attract more research dollars.

In a single-payer system, government sets the prices for medical services. Since government is not good at setting prices, it inevitably over-pays for some services. Research dollars will go not necessarily toward the services that patients find most useful but toward the services that government over-pays since those will be the ones that will be most profitable. [Back to Top]

Myth No. 9: Single-payer will save money because patients will seek care earlier (since they will no longer face financial barriers to health care) when it is easier and more affordable to treat diseases.

This assumes that patients will be able to get access to health care easily in a single-payer system. But as nations with single-payer have shown, even the most basic health care, like routine doctors visits, are rationed. According to a report by Statistics Canada:

· Despite the fact that most individuals had a regular family doctor, almost one in five individuals of those who required routine care experienced difficulties accessing care. The rates were significantly lower in Saskatchewan (12%), Alberta (13%) and British Columbia (12%), and significantly higher in Newfoundland and Labrador (20%) and Quebec (19%).
· The top two barriers to receiving routine or on-going care were difficulties getting an appointment, and long waits for an appointment.
· Overall, 16% of Canadians who had required health information or advice indicated that they had experienced difficulties accessing care. The rates were significantly lower in Saskatchewan (13%) and Alberta (13%), and significantly higher in Ontario (18%).
Seeking care earlier will make little difference if patients have trouble getting a routine appointment with a doctor. [Back to Top]

Myth No. 10: The free market in health care has failed in the U.S.

What has failed in the U.S. is government micromanagement of the health care system. Over the past 40 years government's role in the health care system has continually expanded, from programs like Medicare, Medicaid and SCHIP, to regulations like HIPPA and COBRA. Like most government interventions, it has only made the problem worse.
The fact is we do not have a free market in health care in the U.S. Ask yourself: How many markets in the U.S. do you get a tax break for buying a product, but only if you buy it through your employer, as we do with health insurance? In how many markets are you prohibited from purchasing a product out of state, as we are with health insurance? In how many markets are employers prohibited from providing bonuses to employees for improving quality and productivity, as hospitals are prevented from doing with doctors? If government policy inhibited other markets that way, those markets would be dysfunctional too.
The solution to our health care problems is to reduce the role of government, not increase it by switching to a single-payer system. [Back to Top]

End quote

My only comment is that "myth" is a very polite and nice and friendly way of wording it. I would use other words

Very Weird Statements in the Health Care Discussion

2008-03-14T14:33:00.000-07:00

"America is the only industrialized nation that does not have universal health care"
This is usually written and said with an undertone as if it was something bad, or as if there was something wrong with that fact.
And? So what?
Why should we be like all the rest? Is it bad to be different? Are we back on the school yard, where kids that were different get picked on and bullied? So, we can't be different? What is going on?
Maybe being different is just why the US health care system offers the best quality, maybe that is why people who can truly choose where to get care fly to the US, to Boston, New York, San Francisco, Houston...not to Canada or France or Cuba.
Maybe that is why we are the world leaders in quality and innovation.

Maybe different is good after all. Don't people come to the US because we are different? Because we are just NOT like all the "other industrialized countries"? Why do all those people come to the US, why do they want to immigrate to the US?

I believe we are the leading country in the world. Why should we look at those behind? Why should we choose a system of another country that has not proven its superiority?
Why should the lion copy what the sheep are doing?

But seriously, when I hear people advocating "universal health care" - I do not know if I should laugh or cry....

First, too many of those do not know the difference between "universal health coverage = everybody is covered, everybody has insurance and something very, very different, single payer health care= the government in its infinite wisdom and efficiency administers health care, the dreaded "Medicare for all", think compassion of the IRS combined with the efficiency of the DMV.

I feel like laughing, because it is incredibly nervy and gutsy to actually try to sneakily promote the conversion of a major sector of the economy of the most capitalistic country on the planet
into a socialistic system. The Chutzpah is unbelievable, the nerve, the balls, to even think that. That makes me laugh....

I feel like crying, because all these people are plain ignorant and fall for simplistic arguments that ignore the true causes of spiraling health care costs.
First they have forgotten or never learned and never experienced that the socialistic principle only sounds good on paper. Yes, it is a nice idea, but just an idea. That's all, and we should admire it as what it is. As soon as you turn this nice sounding idea into reality, disaster results. Enough said, just consult your closest history book, I do not need to repeat what is well known.
The sad part is, advocates of a single payer system are unaware (or in plain denial) of the reason for spiraling health care costs: as long as you spend other people's money, you overspend. Also called "Moral hazard" or the "Tragedy of the commons". Or you could call it overconsumption.

As long as everybody spends "other people's money" the increase in health care cost will never stop, not until we are bankrupt.
Someone, somehow has to ration. There are two possibilities:
1. We ourselves spend our health care dollars wisely, we ask our physicians " How can we diagnose and treat this cost effectively"? We make costs truly transparent, so that we can compare prices and quality and shop wisely, like in any other sector of our economy. We have to have a personal stake in health care costs, for example by owning Health Savings Accounts (HSAs), which allow you to keep your health care dollars in your own pocket instead of dumping them in the lap of insurance companies with the opportunities to accumulate money and interest - tax free.
2. We give up on reform and hand it all over to the government, that then institutes cost savings in a one-size-fits-all way, and your health care is dominated by rules set by an anonymous distant "committee". Instead of denial by insurance you will hear "it's not in the budget" "it's not available" and the biggest issue in single payer health care: "get in the waiting line". The waiting line is the symbol of socialized care, for many reasons. Too many for today.

Look at the statistics, before you decide: the cost increase in all health care systems is the same - single payer is NOT the cure for spiraling costs
and look at the statistics for satisfaction of the people: single payer does neither get more nor less satisfaction than our system.

Ever thought why?

Think a little bit, do some research, read about what it really means before advocating something downright dangerous such as single payer health care.

We messed up!

2008-01-31T12:36:00.000-08:00

A quote from 1999. And it is 2008, and it only got worse....

Doctor Discontent N Engl J Med 1999

Almost a decade ago, an article in the NEJM about financial incentives in managed care systems led to an outpouring of emotional responses from physicians (Doctor Discontent N Engl J Med 1999 340: 649-653).

It seems like many physicians had noticed the warning signs and the trends that have brought us to a strained and unsustainable system. Why the physician community did very little to address these critical defects is a testament to the incompetence of our leadership and the need for a new way of thinking.

The following are excerpts from the 1999 NEJM correspondence.

"Many of us feel we were sold a bill of goods. As our friends enjoyed life, we studied our way through college and medical school. Years of long hours, low pay, and tremendous responsibility in internships, residencies, and fellowships were accepted as rites of passage. We were taught that the secret to good medical care was to spend time listening to our patients. Instead, we hear the economic hounds baying at the door of the consultation office, asking us to see more patients in an hour than we know we reasonably can. It is so difficult to repay our loans, support our families, and run our offices in the current environment. The explanation is the bottom line."
"Perhaps the ultimate model needs to be one in which patients share some financial responsibility for their own use of health care services so that they begin to value the concept of cost-effective, appropriate care."

"Even as a diagnostic radiologist, I am not shielded from the control of managed care. Daily we fight little scheduling battles, trying to explain to patients why they can come to us for their chest films but not their computed tomographic scans, or why someone failed to obtain authorization for their magnetic resonance imaging (MRI) studies. "

"I am fed up, and even though I am only 49 years old, I have already cut back to half-time. Within two years I will be fully retired. It is just no fun being a doctor anymore. But what really scares me the most is that as I get older, I will become a more and more frequent consumer of health care services delivered by disgruntled physicians who have incentives to give me less and less care."

"We young physicians are forced to learn "billable diagnoses," formularies for different health plans, key diagnoses for which medication costs will be paid, and insurance codes, in order to know whether we can order laboratory tests or studies, instead of ordering the studies and treatments appropriate to the patient's presentation or the known diagnosis. Notes and charts are increasingly organized to aid utilization review rather than to represent clinically useful medical histories."

" Who would have believed a generation ago that the skills of listening and thinking would no longer be considered essential in dealing with people in pain? Who would have believed that these committed physicians would not be followed by like-minded persons? Who would have believed that my [physicians] judgment, honed after years not just of study but of day-to-day dealings with people and their problems, would be constantly questioned by nameless and faceless corporate minions armed with rule books, or that these same anonymous people would determine what continuing education was or was not appropriate? "

We messed up!
Time to do something!

Disgruntled Docs Go Out of Network

2008-01-31T07:53:00.002-08:00

A quote from Healthcare NBIC:

Hundreds of pissed off MDs gathered at a seminar in New York recently to find a way to beat the healthcare system, specifically the managed care system that they say underpays, overmanages and cheats both doctors and patients. New York has the highest percentage of doctors per patient in the U.S., 328 per 100,000 versus the national average of 281 per 100,000, and the highest concentration of world class hospitals. It's a good place to be a patient, but apparently a lousy place to run a medical practice.

"Out of Network Practice: Opportunities and Benefits," sponsored by the Business Development Institute and Castle Connolly Medical, Ltd., showcased doctors who operate outside of the managed care system. Their patients pay on the spot and later file with their medical insurance carriers for reimbursement -- usually partial reimbursement. Patients get the doctor they want and therapies that are not subject to the care restrictions cooked up the the managed care beancounters; doctors charge what they need to make a living, do without expensive medical billing staff, give more time per visit to a smaller patient roster, and -- to hear them tell it -- get a better quality of life as the healers they always wanted to be.

I Am A Disgruntled Doctor

2008-01-28T18:48:00.000-08:00

After having suffered long enough, a few physicians have decided to clearly state what is wrong with the present healthcare system. They have founded an organization that, in my opinion, represents physicians far better than the AMA, who has lost track of its original mission to represent physicians many years ago.

I welcome the opportunity to introduce you to the American Academy of Disgruntled Doctors.

Here is a quote form their website:

AAdD Principles

Our patients' welfare is always foremost in our minds, and it is for our patients that we shall strive to fix the broken health care system.

1. Health Insurance is not Health Care.

This simple fact clearly needs to be explained to politicians and the media who keep confusing the two. Health insurance is the problem underlying America’s health care woes. It is certainly NOT the solution.

Health Insurance needs to be considered as a method to protect personal finances, not to assure access to health care. Catastrophic health insurance with high deductibles with or without voluntary Health Savings Accounts are a reasonable financial protection. First dollar or low deductible/low copay health insurance plans are a recipe for excessive demand on resources, artificial cost controls, regulatory intrusion, Stalinist 5-year plans, and failure of the medical economy.

In economic terms, demand for health care is NOT inelastic. Price DOES affect demand. When patients pay $15 for $250 worth of health care, the demand for such care increases beyond what is truly needed.

Economic pollution has overwhelmed the medical economy to the point of there being no functional medical economy at all. Economic pollution includes real or effective subsidies, artificial price ceilings, intervening intermediaries, government regulations and other non-free-market forces that prevent the balance of supply and demand. Health insurance companies effectively serve as extra-government tax and subsidize entities. The employer-based first-dollar style health insurance system in America is the reason why health care is expensive.

It is a lie to say that technological advancement is a cause of increased costs of medical care. Technology increases productivity and decreases costs in every other segment of the economy. An example is that computer technology has exponentially advanced in the last few decades while costs for computers have massively declined. Health care costs rise because the free market has been abandoned. Patients don't have a clue what a given medical intervention really costs. Doctors more often than not have no clue what they are being paid for their service. It is time to stop wondering why health care costs soar, and realize that the answer is the loss of the individual involvement in the cost control process. Doctors and patients alike have defaulted to insurance clerks and government agencies to make our medical financial decisions for us. Therefore only the government and insurance clerks currently control costs. What idiot thinks that is smart?

Money is a universal translator for valuation. It is appropriate, acceptable, and indeed necessary to charge money for our expertise. Individual patients and doctors feel ashamed to talk about money. It is time to realize that the true shame comes from not talking about money. Medical care costs money. It really truly does. Stop ignoring the facts and things make more sense.

2. It is the patient's health insurance, not the doctor's.

It is in the best interest of the country for physicians to cease direct interactions with 3rd party insurance payers. The health insurance company works for your patient. You do NOT work for the health insurance company. Indeed, your patient needs to deal with the hassles of their insurance company in order for the insurance company to mend its ways.

Health insurance forms and reimbursement are so difficult because the insurance companies are motivated to make them so, and have no motivation to make them easy for doctors, or to “reimburse” doctors in a timely fashion. If physicians did not get involved with insurance companies at all, the insurers would need to pay heed to their clients complaints and streamline reimbursement to their clients (our patients).

3. Doctors should be paid what they charge, right away.

Remember, “reimbursement” means "paying back". The only way that reimbursement has any meaning is if the insurance companies pay back the patients. This means the patients have to pay the doctor first. Doctors can happily accept credit cards, cash and maybe personal checks. Some of us are happy to be paid in chickens. But we are not happy to have insurance companies pay us.

It is not only acceptable to charge patients directly for services, but indeed it also the responsible thing to do. Remember it IS the patient’s insurance company, not the physician’s. Doctors need have NO direct interaction with a patient’s health insurance company. Physicians need have no coders working for them. No CPT codes, no E&M codes, no ICD9 codes. Just write up an invoice and slide the credit card. There need be no further insurance frustrations in medical offices if we stand up together. “We expect full payment when services are rendered” is a phrase that we should actually mean.

4. It is time to castrate "pre-authorization"

Doctor's can "just say no" to being unpaid consultants to an insurance company's cost control policy. If the 3rd party payer wants to discuss a potential procedure with you, or insist on a cheaper drug, that is fine, but they must pay you for your time.

5. Doctors provide valuable professional consultative services that cost time and money.

For as long as you are contractually stuck with 3rd party-payers, it is fully appropriate to bill your patient for the time spent obtaining pre-authorization. It is also totally appropriate to bill them for calling in prescriptions, answering phone calls and responding to emails. That an insurance company does not pay for these actions in no way lessens their value, nor the value of the time you spend accomplishing them. We need to have a mindset as follows: “I don’t know what your insurance will reimburse to you. But here is the amount that you owe.” Answering phone calls, emails, and calling in prescriptions are obviously all billable services. To be thoroughly clear, we at AAdD don't care whether the insurance companies think they are billable or not. We consider it undeniable that they are billable. In fact, it is necessary to bill for these time-consuming activities in order to assure an adequate supply of physicians for now and in the future. It is part of the process for balancing supply and demand, which is the appropriate term for optimizing access to and availability of care. The difference being that the free market can truly optimize accecss to care, whereas socialism and 3rd party-payers don't have a chance to do so, and indeed invariably lead to imbalance of supply and demand for medical services, and therefore poor access to care.

6. The phrase "If you don't document it, it didn't happen" is a lie.

This concept is foisted upon us by 3rd party payers who don't want to pay. The notion that adding 3 little words to the Review of Systems changes the "allowable" amount for billing is ridiculous.

7. We can entirely dispense with coders.

There is no need for CPT codes, E&M codes, ICD9 codes, JCAHO and HIPAA, as long as we stand up together for a common sense, comprehensible, fiscally rational medical economy. The current medical financial system in America suffers from all the economic failings of socialism, plus all the hassles of innumerable and hated 3rd party-payers. One thing to consider is that it is totally acceptable to bill by the hour if you wish. Lawyers do. Auto mechanics do. Almost everyone does. Billing by the hour allows the patient to be in some control of the cost of a visit by giving them knowledge about costs which in the current system are unknown to them (and often to us as physicians!)

8. Socialized Medicine is completely unacceptable in America.

It is in the long term interest of the nation to say no to socialism. Socialism has failed in the largest human experiments ever undertaken. Millions of lives were lost in those experiments under Stalin and Mao. In some countries, socialism hasn't failed yet, but in those countries invariably the wealth of the nation (people and money) is being rapidly exhausted. Medical Care is too important to condemn to the idiocy of socialism. It is acceptable and indeed may be honorable to not accept Medicare and Medicaid, or for that matter any other insurance in lieu of direct payment to you from the patient. It is also acceptable to provide medical care for free or reduced fees, if you, as the doctor, so chooses. As a physician, you can give discounted prices for the expert advice you provide, if you so wish, to patients, and without obligation to provide the same discounts to others. It is up to you as a physician; it is in your power.

It is unacceptable to force doctors into socialist medicine. If you are one of those misguided doctors who thinks that we should have universal health insurance or fully socialized medicine, the AAdD thinks you are shortsighted, ignorant of history, and we don't want anything to do with you. However, we will make a deal with you. We won't try to use the inordinate power of government to prevent you from socializing your practice, if you don't try to use the power of government to force us to socialize ours.

Free market medicine is the most caring form of medicine, for it allows continued advancement of the science and art to maximally help the current generations and all those to follow. On the other hand, universal health insurance and socialist medicine is billed as caring, but indeed is short-sighted, devastating to the health care of future generations, and, not to mince words, outright idiotic.

9. Patients are primarily responsible for their health.

Lifestyle influences health more than doctors do. If a patient is more responsible for a bad outcome than the doctor (for example, if a doctor makes a delayed diagnosis of smoking-induced lung cancer) then the patient sure as heck should have no legal case against the doctor.

Americans can be smart enough to make their own informed health care decisions, the same way they make decisions about buying vs. renting a home. Some fixing up of the government school system may be needed, but that can be accomplished too.

10. Ignore HIPAA wherever possible.

HIPAA is an insane, complicated and terribly expensive law that would never have been needed had the government kept to its constitutional role and stayed out of the health care business.

If these propositions coincide with your values, please express yourself not with random frustrated squawking that you know goes nowhere, but rather with a coordinated effort with others who share your views. It is time to recover our own self-respect. It is time to take back our Profession. It is time we use what power we have left to fight for what we know our patients will need, now and in the future. It is time for physicians to stop being pushovers and suckers. Having been so for the last few decades has led to potentially irreparable harm to our profession and our patients.

Join the American Academy of Disgruntled Doctors. We are the politically incorrect Academy, with a mission to solve the real economic problems that are destroying medical care in this country. We do what the AMA is afraid to do--speak the truth loudly. We are dedicated and serious.

Join us.