Universal Health Care: Promise of HIT Reform

All of the candidates proposals so far have included an estimate of savings related to improving Health Information Technology. All of them are quoting the RAND report which was published in 2005 as a monograph.

The monograph is very detailed, 105 pages long and includes the calculations used to arrive at their conclusions. Interestingly though, they provided their estimate of savings BEFORE the estimated cost of implementation. Kinda like the cart before the horse. They also state that their estimates do not include any cost or savings related to the different systems being able to communicate patient information with one another across any distance. In other words, your doctor’s office system can’t talk to your pharmacy’s system that can’t talk to the hospital’s system.

Many hospitals and physicians offices have already started implementing EMR’s (Electronic Medical Records), at their own cost. Many have done so in response to HIPAA (Health Insurance Portability and Accountability Act) requirements. HIPAA dictates how health information transactions are to be carried out between applicable agencies/businesses (the standard) mostly for billing purposes.

The estimates for the cost of implementing an EMR quoted in the RAND report did not take into account any economies of scale, since most practices comprise 4 or fewer physicians. The estimate for implementation was $22,000 per physician as initial start up costs and $4,400 per physician for annual maintenance costs. Not an inexpensive project.

How do these figures compare to a real world practice? A moderate size specialty group in our communty is currently implementing an EMR for their practice. They have been planning the implementation for some time and took the effort to look at a large number of available products before making their final selection. Ultimately, the product they chose is costing each of the physicians in the group 30K-40K each, not including the loss of prductivity mentioned in the RAND report.

This group has 30+ physicians and physician extenders. If they are not able to achieve some measure of economies of scale, imagine the cost to a smaller practice. The often quoted RAND report likely needs to adjust it’s figures, especially since the data in it is from 2004.

If we assume 30 physicians and an average cost of 35K per physician, then the total one time set up cost is $1,050,000 PLUS lost productivity during a training period (RAND estimates this loss at 15% of revenue). The annual cost of maintenance is 20% of the initial cost or $210,000 per year for this practice of thirty physicians. They have to make up that additional practice expense somehow, somewhere. How about charging more or seeing more people?

Can’t charge more because insurance will only pay $XX for a certain visit/procedure, no matter what you charge and the providers’ contracts prohibit them from charging the difference to you (except for deductibles and copays). Seeing more patients? The more patients you see, the less time you spend with each one, the fewer things you can address at a visit. Kind of goes against the whole idea of improving quality and quantity of care, doesn’t it?

I don’t know who the candidates think is going to be SAVING money by implementing the HIT improvements they are all promoting, but I doubt it is going to be the providers. At least Obama is willing to spend money for the HIT improvements, and his estimate of the cost to do so over a five year period seems reasonable.

As I’ve mentioned before, there is not going to be a no-cost, painless solution to the problem of healthcare and coverage for the under and uninsured. But, so far I’m not impressed that anyone has come up with a comprehensive, budget neutral, fair, quality driven program that meets the NEEDS, not wants, of the patient citizenship.

Doc B

My opinion is free.
Advice is worth exactly what you pay for it.


Health Care-Barack Obama’s Vision

Well, now that Super Tuesday is over, there’s only one candidate to review; Barack Obama. McCain has effectively eliminated his Republican opponents, while Clinton and Obama have turned the Democratic race into a much needed slugfest.

Turning my attention to Obama’s Healthcare plan gives me reason to think that all of the candidates are looking at hybrid systems. Shame. In the long run, they are not going to work. If the goal of universal healthcare is the goal, it shouldn’t have to cost more than it does now. And it IS going to cost.

Obama’s plan varies from some of the others in that there is no mandate for coverage. If you want to opt out and pay, you can. If you come in contact with the healthcare system, such as a hospitalization, you will be required to sign up. Seems reasonable. You can read Obama’s entire plan here.

Things I like; universal care available, but not mandatory; sense of personal responsibility for your healthcare coverage; concentration on chronic disease management and disease prevention (same as everyone else); National Health Insurance Exchange and portability; guaranteed eligibility

Things I don’t like; expanding SCHIP; protect against natural disasters?; government subsidies; small employers to contribute a percentage of payroll; Federal reinsurance; ensuring healthcare quality and transparency; promise of maplractice “reform” isn’t really reform at all.

There are many common themes in the healthcare plans of all the candidates. Obama’s seems to vary from Clinton’s mainly with mandated vs voluntary coverage. I like the idea that people take responsibility for themselves in some form or fashion. Entitlement programs, to date, have created a subpopulation of our country that are so dependent on their government that they CANNOT care for themselves. It’s time to wean them.

Obama’s National Health Insurance Exchange is a good idea to promote some forms of competition, make shopping for insurance easier by offering comparisons (although, according to Obama, all plans have to offer similar benefits anyway-how much shopping will you need to do?), and provide a location for comparison’s of qauilty-which I think is it’s best benefit.

EXTREME care needs to be given to the assessment of quality as is currently being reported by such places as Healthgrades, some state government websites and being contemplated by Medicare. So far none of the reporting sites takes into account differences in documentation, severity of a patient’s illness (some people with the same illness are just sicker than others), complications or comorbidities.

Documentation is the key to assessing true qaulity and outcomes. If the documentation comparing two hospitals, for instance, is exactly the same, then you could compare them with a greater expectation that the “grade” they are given is an accurate reflection of quality. Take Healthgrades as an expample. Compare two hospitals in your area and look up their grade for Stroke, Pneumonia or Myocardial Infarction (heart attack). Look at the ranking of the two hospitals, then expand those hospital’s specific data. If the hospital with the lower ranking has a lower rate of mortality, then the issue is most likely poor documentation, not poor quality of care. But of course, that’s not the perception that Healthgrades gives you.

Expanding SCHIP, or any Medicaid program without eliminating the waste in it is irresponsible. Looking back at an earlier post with the national healthcare data shows how expensive Medicaid and SCHIP are already. Not a very cost-effective way to provide care. And now the government is trying to contract out Medicaid in an attempt to develop a product comparable to Medicare Advantage, which Obama acknowledges contains a large amount of administrative waste. It also means that the new administrative overhead is NOT being spent on patients or the providers who care for them.

The plan as a whole will be more expensive. Employers will be expected to contribute a percentage of payroll towards coverage if they don’t offer it as a benefit. The natural response to keep the employer “budget neutral” will be a reduction in wages. Federal subsidies just mean the government will be spending money on healthcare indirectly, but spend it nonetheless.

His promise of healthcare reform really doesn’t address two important areas. First is tort reform. Our current system rewards attorneys for large settlements. That alone is a huge incentive for the attorneys to file frivolous suits in hopes of hitting the jackpot. Award caps or reasonable caps on attorney fees/charges would help to stem alot of that problem. No more contingency fees. If the case has merits, they’ll take it anyway. also, states with caps have seen liability insurance rates decrease significantly.

Second, with regards to tort reform, is protection from prosecution if the providers have followed accepted best practice guidelines. Shit happens and not every death is preventable despite our best efforts. Why should someone be sued if they have provided the best care possible and followed accepted best practice guidelines?

Obama’s plan also stinks of “Big Brother”. The National Health Insurance Exchange is going to monitor quality, competition, pricing, monopoly, benefits offered, profit and premiums. Sounds a lot like a public service commission. Regulation does work to control cost but not to foster competition, which is the reason most industries were deregulated in the 1980’s. Prices did increase, but each company did it’s best to differentiate itself from the competition, either through innovation or products/services offered.

All in all, the big three have similar plans with some differences. Too bad all of them think that the government’s involvement in a partnership with the insurance industry is a good idea. Insurance companies are greedy and the governement is wasteful and inefficient. What a combo.

Doc B

My opinion is free.
Advice is worth exactly what you pay for it.


Health Care; John McCain’s Way

John McCain gave some details regarding his healthcare plan at a speech in Iowa back in October. The entire speech can be read here. I didn’t find a separate link on his website leading to a formal outline, so this is all we get.

Things I liked about McCain’s “proposal”; coverage for all; tort reform; idea of coordinated care; emphasis on personal responsibility for our health and prevention of chronic diseases;

Things I didn’t like; health benefits instead paid to employees as wages then give them a tax credit; emphasis on payment for “quality” without defining how to measure it or account for complications or comorbid diseases; almost no emphasis on reducing waste in government run programs; coordinated care(more detail for the contradiction below);

Overall, McCain’s approach is from a conservative point of view that doesn’t disrupt the “staus quo” very much. It seems to focus more on an oversight role to ensure the quality and accountability he repeats over and over again. Corporate greed and profit certainly aren’t mentioned as places to trim fat from healthcare expenditures.


1. Like Hillary, McCain is suggesting that instaed of employer funded insurance benefits, the employee should be paid wages, have the wages taxed and then get a tax credit from the government. For low wage earners this will seem like they hit the lottery. Receiving an additional 6-8K per year as wages, a low tax rate AND a tax credit, who wouldn’t vote for that? As income increases, the tax rates increase and a smaller portion of those wages come to you. Don’t forget that you also pay 7.625% (along with your employer’s matching contribution) as Medicare and Social Security Tax. And you still have to buy your health insurance. Again the less you make the better off you are. Another form of redistributing income, except now the government wants it’s share though increased taxation.

2. Paying for quality is not a new concept. As I mentioned in the Hillary post, Medicare 646 was designed to look into better ways to provide quality, explore the benefits of paying for chronic disease management and also, disease prevention. Insurance companies are doing this already. The government may be ready to participate AFTER they review the results of their 5 year study that won’t conclude until 2012.

3. Coordinated care IS a great concept. Care must be taken to make sure that there can be some variability based on a patient’s “severity of illness” and their complicating or comorbid conditions. For example, it would cost MUCH less to care for a 55 year old female, who only has high cholesterol and needs cardiac bypass surgery than it would be to take care of a frail, 68 year old male with high blood pressure, diabetes, high cholesterol, chronic kidney disease, anemia, tobacco use and emphysema, who needs the same bypass. It may sound extreme, but the male patient is pretty typical for someone with heart disease, more so than a 55 year old female.

4. Medicare has started looking at “severity of illness scores”, physician’s practice patterns in regards to specific diseases comparing them to their colleagues and resource utilization. The problem is that Medicare is only looking at the claims that come to them with specific diagnoses. They are not fully taking into account the patient’s complicating and comorbid conditions. The Inspector General has recommended that Medicare use all of this data as a measure of quality and payment for that quality, but only after the data reports what it is supposed to. They aren’t there yet.

5. Medicare, nor anyone else for that matter, should have to pay for medical errors, but at what point does an action constitute an “error”? And what is the definition of an error? In most people’s minds an error is anything that doesn’t go as expected. Dictionary.com also defines error as “a wrong action attributable to bad judgment or ignorance or inattention”. I think this is the definition of error we should use for healthcare. If granny is in the hospital, gets out of bed to go to the bathroom, and in her usual, at home, confused state, falls and breaks a hip, does that constitute an error? Medicare thinks so and won’t pay for the treatment of her broken hip. And Medicare won’t allow granny to be restrained, even if it is for her protection. Perhaps the presidential candidates should all spend a week in a hospital watching all the grannies, then when they fall, the error can be theirs.

Overall I think McCain’s healthcare plan is a less painful alternative to Hillary’s. But McCain doesn’t give us enough detail, isn’t addressing government waste and inefficiency in the Medicare and Medicaid programs, neglected to speak to insurance company profiteering, forgot to tell you about the additional taxation and forgot to mention how much this thing will cost.

Sounded good in the speech though.

Doc B

My opinion is free.
Advice is worth exactly what you pay for it.


Health Care: Hilliary Clinton Style

I chose Hilliary as the first presidential candidate to review because she has tried and failed already during Bill’s first term as president. Let’s see if anything has really changed.

Hillary’s Healthcare plan can be viewed here for the cliff note version and the entire plan here, in pdf format.

Things I like about Hillary’s plan; guaranteed coverage, coverage for everyone and eliminating insurance company discrimination regarding whom to insure, whether to insure, and rate adjustments for higher risk patients.

Things I don’t like; everything else.

The lengthly, and often redundant, pdf version of her health plan contains a lot of rhetoric aimed at appeasing and attracting the simple-minded potential voter. Some key points to ponder;

1. Eliminating the employer exclusion for health insurance means that your employer will no longer be able to write off their cost of your health insurance premium as a business expense. Instead it will be included as taxable income to YOU. Of course, they’ll give a TAX CREDIT, to offset the extra tax you’re paying already.

2. Medicare 646 is a study commissioned by CMS (Medicare) to find more efficient ways to provide care. Here is the link. What Hillary is proposing as HER idea was actually put into place in 2005. Final applications were accepted Sept of 2006. Implementation of the study was to begin in 2007 and continue for 5 years. The object of the study is improving efficiency in government funded programs, not private. Most private insurance companies and providers are already implementing many, if not ALL, of the recommendation made by Hillary and still under study by CMS.

3. Hillary claims significant savings from preventative services and chronic disease management. But, Medciare stops paying for annual pap smears and mammograms for eligible Medicare women because those women are “too old” to have breast or cervical cancer. Breast cancer is still the #2 killer for women behind lung cancer. Most insurance companies and hospitals have already instituted disease specific management protocols because they have realized their fianancial rewards. The government funded programs have not.

4. Health insurance choice? If I were to choose what plan to accept; mine, federal employees or Medicare, I’d choose federal. They have the best coverage at the lowest cost, and we, as taxpayers, are paying for EVERY penny of it, even the amount the members of Congress pay “out of pocket” (we pay their salries too). Here is a link to their plans and premiums. See how they compare to yours.

5. Why opt for the most expensive plans (see earlier post for cost per person comparison)?. Expanding the already expensive and inefficient Medicaid program is not the answer. Neither is choosing a Medicare-like insurance option.

Be careful what you ask for, you just might get it. But, don’t let someone sell you a bill of goods just because it sounds good on the surface. There is no easy fix for any problem that consumes 16% of the US GDP. It’ll take a lot of time, compromise, sacrifice and pain to create something we can all live with. Let’s have the patience to tell all the candidates to look before we leap.

Doc B

My opinion is free.
Advice is worth exactly what you pay for it.


Presidential Candidates Health Care Proposals; Baseline Data

In order to make sure we’re all playing on a level field and that none of the candidates try to play with the data, I am including the 2006 Census report for Historical Health Insurance Tables. This is the data that everyone is quoting that states 47 million Americans are without health insurance coverage. What no one is reporting is how our health care dollars are being consumed among the various groups. Let’s see if we can shed a little light on the subject.
Everything I report here is available from the US Census Bureau website, the CIA Factbook and a link to an article by a Canadian physician with his views on Universal Health Care run by the government.

Total dollars spent on health care for 2006 $2.105 TRILLION

Population of the US in 2006 296.8 Million

Average cost person for health care $6,700

Private Pay $1.1352 Trillion (51% of Total)
(private insurance, out of pocket, etc.)

Insurance costs $723.4 Billion
Out of Pocket expenses (consumer) $256.5 Billion
Other (non-government) $155.3 Billion

Population covered by Private monies 201.7 Million (67% of general pop)

Average cost per covered person $5,628

Government Pay $970.3 Billion (45% of total)

Medicare $401.3 Billion

Population covered by Medicare 40.3 Million (13.6% of pop)

Average cost per person Medicare $9,939

Medicaid (Federal, State and SCHIP) $569.1 Billion

Population covered by Medicaid 38.3 Million (12.9% of pop)

Average cost per person Medicaid $14,859


If there are inefficiencies inherent in the “system”, wouldn’t it make sense to go after the apparently most inefficient one (cost/person) first?

The government programs spend much more per person than do any of the private programs, AND cover less people.

The uninsured are actually covered by the private sector because as they seek health care, they may receive a bill from a hospital or physician, but they won’t or can’t pay it, so it gets written off as bad debt. The government has a fixed payment system, there is NO WAY for private entities to recoup any of these costs except through private, paying customers (cost shifting).

If you recalculate the cost per person for the private sector and ADD in the uninsured, the actual cost per person is $4,564.

ALL government programs are paid for with your tax dollars. Expansion of any government program will simply increase taxes or decrease deductions.

An article by a Canadian physician, Dr. David Gratzer, looks at the Canadian style of National health care from his perspective as a patient and as a provider. I recommend it as required reading for anyone considering letting the government run anything. Find it here.

Doc B

My opinion is free.
Advice is worth exactly what you pay for it.