The Only Solution
The only solution to the healthcare morass is to embrace the American reliance on free markets. Capitalism works because people are free to spend their money in ways that give them the best value for their dollar. The automobile market is a useful analogy. When people buy a car, they look at two things: the price and the quality of the vehicle. They do not purchase a “plan” that they hope will allow them to get the car or truck they want and need. They compare a vehicle’s features with others in their price range. They talk to other people for recommendations. They can read consumer magazines that publish reliability data on all models and makes. The decision generally comes down to price and quality. The result is “value”: How much are they getting for their money? Two reports published by the Rand Corporation in the New England Journal of Medicine in the past four years indicate that the chances of any patient getting the proper diagnosis and treatment in any given medial encounter are only about 55%. This is simply no longer tolerable.
The healthcare “market” simply does not exist in the traditional sense. (I should mention here that I got straight A’s in twelve credits of economics courses I took in college.) Patients generally are reduced to buying “a pig in a poke.” First, it is simply not possible to determine the quality of care rendered by each of the physicians in one’s geographic area. Second, the patient does not pay for the care himself; fees are determined by the person’s insurance company. Since the fees paid to the physician are generally the same for all doctors on contract to that insurance company, be it private or public sector insurance, shopping by price is not possible.
In order to establish a marketplace for physician’s services, it is mandatory that the quality of care for each physician be known to the public. The second part of the equation is to know the “cost” of each physician. Clearly, both of these are not something that Consumer Reports has the resources or expertise to determine. Determining cost and quality of physicians is conceptually simple but extremely difficult to determine accurately in the real world. Nonetheless, society has no choice but to do so if we are to solve the problem. There is simply no other economically rational solution. While this solution may be difficult to put into practice, the failure to do so is resulting in the loss of many thousands of lives and hundreds of billions of dollars annually.
The Institute of Medicine (IOM) published a position paper a few years ago stipulating that the most important thing to accomplish in American medicine over the next two to three decades is to generate “report cards” for every provider in the country. In 2006, the IOM advocated that doctors and hospitals be paid depending on the quality of care provided. Within the past three years, Medicare, under Mark McClellan, started a pilot program with twelve large clinics around the country. Under this program, simple measures of quality were made for each clinic for each of several diagnoses. The measures of quality used are what I refer to as “process” quality indicators. Examples include how well blood sugars are controlled in diabetic patients, or if patients are given the recommended medications after a heart attack. The clinics with good adherence to the recommended care receive a slight—I believe 3%—increase in reimbursement for each service provided. Preliminary published results have shown an increase in the use of desirable practices in these select institutions, but not necessarily a corresponding improvement in patient outcomes.
Ultimately, process indicators do not give a true picture of the quality of care. True quality can only be determined by measuring “outcomes.” In New York and Pennsylvania, outcomes for all cardiac surgeons in the state have been measured and published for many years. These outcomes include the death rates for surgery by an individual surgeon for different types of heart operations. So, the precedent has been set, but there is a serious problem with these published data. They do not accurately measure how sick a given surgeon’s patients are prior to their surgery. Obviously, if one surgeon operates on patients who are much sicker to begin with, the death rate will be higher than another surgeon’s whose patients’ condition is not as bad to begin with.
Because of this, a surgeon who is willing to operate on sicker patients will be unfairly penalized if his outcome data are not adjusted for the severity of illness of his patients. This same principle applies to doctors in all specialties. Adjusting outcome data is not an easy task to accomplish, but we simply have no choice if the measured outcomes are to be a true reflection of the quality of care provided by a doctor. Fortunately, we have the mathematical and scientific tools to accomplish this difficult task.
Over the past several decades, the medical community has developed the tools to accurately measure severity of illness in patients. All one has to do is pick up any respected medical journal and peruse any of the scientific articles. In each article, the characteristics describing the group of patients being studied is listed in meticulous detail. These include the basics of age, sex, and conditions such as high blood pressure or diabetes. In articles describing the results of a particular form of treatment for a cardiac condition, all relevant aspects of the patients’ disease are quantitated. For example, if heart failure patients are being treated, the severity of symptoms and the basic measure of heart function, left ventricular ejection fraction, will be summarized for each patient group being treated with a certain drug or operation. Careful statistical analysis of the data allows scientists to determine whether or not a given drug or operation will actually improve symptoms or prognosis for any given condition.
These same methods can be applied to an individual physician’s patients. If we know the severity of illness for a cardiologist’s heart failure patients, then we can measure how well those patients do over a period of time as an accurate measure of that doctor’s outcomes for heart failure patients. Say, for example, a cardiologist has a thousand patients with heart failure in his practice. It is a simple matter to follow those patients over the course of a year. The number of hospitalizations those patients require during that year can easily be counted; so can the number of deaths or total days spent in the hospital. In addition, it is vital that a method be devised to calculate the percentage of diagnoses made by each individual physician or group of physicians which subsequently proves to be in error. The public needs to know and has a right to know which doctors are poor diagnosticians. In the final analysis getting the correct diagnosis for any patient is a precondition for quality medical care.
Is it too big a job to measure outcomes for the tens of thousands of cardiologists in the United States? Heart failure patients in the country number in the millions. While it may not have been possible to do this in the past, computer technology has changed that. The methods used in medical research are scalable and can be applied to entire populations. The adoption of digital medical records will result in a system in which data can be easily obtained and analyzed. But even using the information available with the current medical record system is adequate to get started measuring quality in a meaningful and accurate way. The longer we wait to get started, the more Americans will die unnecessarily from poor quality medical care.
The next part of the solution requires measuring costs. Let’s use the example of congestive heart failure again. We can measure Dr. Schneider’s outcomes, but if he spends a million dollars per patient per year, his care will certainly not reduce the cost of healthcare in this country. So we have to measure Dr. Schneider’s average cost per patient per year for all one thousand heart failure patients in his care. Clearly, hospitalizations are very expensive. Most procedures, such as heart catheterizations, open heart surgery, cardiac MRIs and echocardiograms, are also very expensive. Adding up all the costs to the healthcare system for Dr. Schneider’s 1,000 heart failure patients for each year is a simple matter of arithmetic. Once we know Dr. Schneider’s outcomes and cost per patient, it can be determined if he is a low-cost, high-quality provider or a high-cost, low-quality provider, or somewhere in between. It then becomes a simple matter to give Dr. Schneider a “report card” for congestive heart failure each year.
The next part of the solution is to pay doctors with better grades more for each service provided. Under the current system, doctors are paid for quantity, not quality or cost effectiveness. This results in a massive over-utilization of resources. As illustrated by the numerous anecdotes in this book, there is enormous economic pressure on good doctors to order unnecessary tests. There is also enormous reward for greedy doctors to do as many tests and procedures as they can get away with. I think human nature is such that, if society wants high-quality, low-cost care, the only way to get it is to pay for it. It’s not possible to pay for something that is not measured. Q.E.D. (Quod erat demonstratum.)
Exactly the same basic economic principles apply to other health care providers such as hospitals and nursing homes. This data must be openly available to the public in the same way that cardiac surgeons’ data is available today. This will allow all patients to make informed decisions when choosing a doctor and hospital. Of course, patients will not be motivated by cost data as much as outcome data, because patients don’t pay fee for service; insurance companies do. By law, doctors must charge every patient the same for the same service. However, we must develop a system in which insurance companies reward doctors financially for keeping costs down and quality up. Will they do it? If not, and I don’t believe private insurance companies will, then the system must be changed. Don’t forget private insurance companies and HMOs have as their primary fiduciary responsibility the financial well being of their stockholders, not the patients. Of course, the executives who run these companies are not at all interested in the amount of money they make every year. Not! The next chapter addresses this issue.