American Health Care Is An Economic Train Wreck

By John Ballard

I'm so tired of hearing how competition drives down costs I want to puke. That may work at the local farmers market or a quiet community where shade-tree mechanics and third generation lawyers and bankers compete for customer loyalty. But when shopping center developers and retail giants come to town the principle starts to unravel. Everyone knows the drill... economy of scale, cheap overseas labor, technology and all that.

But this morning I'm thinking about the medical-industrial complex which has become a cash cow for so many big companies, sucking up vast fortunes, developing costly real-estate, covering office-park sized developments with spin-off medical businesses, all feeding from a single revenue stream: money intended for medical care that instead becomes a money fountain employing far more non-medical workers than those actually providing care. Real estate brokers, landscapers, construction workers, courier services, furniture companies, window cleaners, the list is endless... and don't forget armies of administrative personnel who answer phones, file records and manage each other, so many that entire human resouorce departments must have specialized jobs, even lawyers, to balance the load.

Anyone who thinks this is the best way to do medicine is living in a fool's paradise. It is no wonder that other countries have long ago gone single-payer. The real wonder is that it has yet to happen here.

Political smoke and mirrors is so much a part of our system that we have come to accept it as "how stuff works." The health care debate is the most recent illustration of that principle. The moment that the "costs" argument reared its ugly head the appropriate response should have been "What about the costs of a questionable war in Afghanistan? Or the costs of neglected disease and injury? Or the costs of bankruptcy resulting from unpaid medial bills?"

Reality is this: universal health coverage will cost more than the rationing system now in place. Period. We can recover some of the costs from curbing inefficiencies. New taxes will be levied, but we will have to call them "fees" for people who earn less than a quarter million dollars a year and small businesses grossing less than whatever the final negotiated amount will be. But to suggest that more care for more people will not cost more than the current system is blind ignorance. (And proponents of reform say teabaggers are stupid.) That includes any public option, cooperative or assembly of cooperatives.

Proponents of reform swallowed the "cost" argument to their peril. Ian Welsh points to the naked King with yesterday's Public Option Won�t Reduce Costs. Building on a Matt Taibbi piece in Rolling Stone he says quite sensibly about the public option...

...It will not reduce costs, it is questionable that it is even viable. And yet progressives are going balls-to-the-wall for a non-viable public option which won�t even reduce costs rather than, at the least, fighting for a real public option?

Folks, you are being sold a bill of goods. The people shilling for this version of the public option, whether politicians or others, are shilling for something that won�t work (not that even a nominal public option is likely to be in the final bill).

The best thing that can happen, at this point, is for nothing to be passed. Because right now it looks most likely you are either going to be forced to buy insurance without an option to buy a government plan, or you�re going to be forced to buy insurance with the possibility of buying government insurance that�s no cheaper than private insurance, and which may not even be able to stay in business (it does have to succeed without any subsidies.)

Bending the curve has become a buzz phrase in the discussions. It's a nuanced way to say "Don't expect quick results."

If legislation squeezes its tortured way through Congress -- even if the finished product sports the label "bipartisan" -- one reality is certain: if the curve bends, it ain't gonna bend in the right direction. In time there will be a change in how health care is delivered in America, but I don't expect it to happen in my lifetime. And I don't expect it to happen because of anything done by legislation. 

Being an eternal optimist, my expectation is that changes for the better will come in the form of educational and professional changes. I see evidence, for instance, that electronic data systems are already creeping into the system, streamlining information flows in ways that will inevitably reduce errors and make some tasks less tedious. Dr. Gawande's article in the June New Yorker is having an impact, and I expect that within the next few years many urban delivery systems will be striving to reduce costs as per patient expenditures becomes a meaningful performance metric instead of an asterisk in the annual report. With or without legislation administrators at CMS already have a lot more power than most of the public appreciates, and it is finally getting coordinated in ways that can make a difference.

My mother's nursing home was top of the line and she was there as a Medicaid beneficiary because she had no assets. I was able to confirm my good impressions from a recent addition to the Medicare website allowing anyone to compare nursing homes in a searchable database, using city or zip code and a radius to find all available, then selecting several to compare side-by-side (number of beds, staff composition, results of health inspections, etc.). For example:

This information is self-reported by the nursing home and gathered during the most recent health inspection. This star rating is for overall staffing hours, which include Registered Nurses (RNs), Licensed Practical Nurses (LPNs), Licensed Vocational Nurses (LVNs), and Certified Nursing Assistants (CNAs). Other types of nursing home staff such as clerical, administrative, or housekeeping staff are not included in theses staffing calculations.
To calculate the rating, the number of staff hours per resident per day was used and then the information was case-mix adjusted. Case-mix adjustments take into account the different levels of resident needs (or mix of cases) in different nursing homes.

When looking at the five-star ratings, more stars are better. Five (5) stars are the most a nursing home can get. One (1) star is the fewest.

Similar statistics are being collected for hospitals, home health agencies, and other providers.

C-SPAN's excellent focus on health care last week took viewers behind the scenes in a Virginia Hospital. I was unable to see more than a short excerpt, but I have done enough homework over the last year to know that a solid, concerned core of health care professionals are aware of the problems and are seriously seeking ways to solve them. Unfortuntely their hands are bound by too many entrenched habits and wasteful policies that have been in place for decades.

I'm beginning to join the ranks of those who say skip it and wait for conditions to get worse. In a few more years we will hit the wall with a fiscal catastrophe that will make today's financial problems look like a residential foreclosure. A nurse at a hursing home was telling me just last week how much wast she sees in her own job. Residents who will only need a week's supply of a certain prescription will automatically be given a thirty, sixty or ninety-day supply, billed to Medicare, and destroyed when not used. She knew of a case where a resident needed two or three nebulizers and the order came in - five boxes! She said it happens routinely. And that doesn't count how easy it is to get pain madication. Multiple physicians treating patients rarely keep up with one another and routinely issue pain medicine that in many cases is never even purchased, in a careless attempt to avoid patient complaints.

The amounts of prescription medications really needed in many nursing homes might be enough to justify an in-house pharmacy to keep the volume down to an economical level, just as the kitchen keeps down food costs. But I doubt there are many in-house pharmacies in nursing homes. Same for hospitals. But that's just a layman talking.

These are examples of wastes I have seen personally. I am not alone. In time, someone will either find and correct these problems, or they will be corrected the hard way.

As long as Medicare reimbursement rates remain Congressional pork, Medicare  (unlike the VA and Medicaid)  is not permitted to negotiate prices with the drug companies, not-for-profit hospitals continue to game the system on behalf of the for-profit practices they service, and fee-for-service models are more numerous than medical home or capitation models health care inflation will continue unchecked.