Professor Otteson discusses the fatal flaws of redistributive planned economies, not the least of which is a decline in cooperative innovation.
As we continue to examine the outcomes of socioeconomic initiatives throughout our history, it becomes apparent that society’s benefits are not necessarily derived from good policies as much as from the absence of bad ones.
– Robert Nelson
These names are, in many ways, synonymous with the current free market movement, and for good reason. These men are the mavericks of healthcare. When Dr. Smith and Mr. Kempton were introduced in 2011 by a mutual friend and client, they had no way of knowing that their partnership would become what it is today and create an entire movement in the healthcare space.
Jay Kempton: When you understand how this business really works, you can see the effect of the dysfunction which I just described; but when you learn more about the cause, you can see that the patients’ actual financial concern is not even on the radar of so many entities that are part of big healthcare. Hospitals really do not understand that the gouging of pricing that they do trickles down into basically wage stagnation to employees. They say, “We’re raising our prices, but it only hurts the big insurance companies.” No, that’s never the way it works. It eventually makes it way as an increased cost to the employer. They can’t afford to just absorb the increase, so how do they offset that? By lowering or decreasing the increase of wages or they reduce the benefits, or both.
What is the greatest obstacle that this movement and the FMMA faces?
Dr. Keith Smith: The answer may be counterintuitive. I think the greatest obstacle the FMMA and this movement faces is ourselves. We are so programmed and conditioned to look to outside leaders or to the government for solutions and answers. They are ultimately responsible for all the problems that have led to our current system. The answer is looking to ourselves and having the courage to face the possibility that, in innumerable ways, we have been duped. Admitting that is a very personal and difficult experience for many people—to look in the mirror and acknowledge that they’ve been lied to. Even worse, we have believed these lies and have acted accordingly. People must acknowledge that it is a ground up movement, not one where solutions rain down on us from our rulers or our leaders. They must do their own thinking and not allow those who would like to be protected from innovation to stop us.
Jay Kempton: The obstacle that’s not so benign is how people in the healthcare business get paid. Brokers, consultants, and agents have tremendous influence over employers and patients, and the way that they see healthcare. Many people in the employee benefits business get paid when they make money off the problem. In other words, they’re making a percentage of the healthcare spend. The problem gets bigger, their income goes up.
If you could tell someone just one thing about the free market in healthcare what would it be?
Dr. Keith Smith: The one thing I would tell them is that the free market is not about sellers having their way with consumers. The free market is not about brutalizing the poor, or people who are trying to pay for their own care.
The free market is about an exchange between buyers and sellers that is mutually beneficial, where both parties emerge feeling like it was a good exchange. Any time that the media quotes some corporate healthcare exec or politician bemoaning the tough future that one of the sellers might face given some policy that might be enacted should be discounted or ignored. The focus has to be on the consumer, and on whether a consumer’s decision to buy A or B is a value to that person. The one message that I would give is to know that this movement is about servicing consumers. Period. Any concerns or desires that sellers have to be protected from the preferences of consumers must be seen as the source of the problem that we all face in health care today.
Jay Kempton: The free market and healthcare is the only true healthcare reform that has a chance of being sustainable. Anything else is just rearranging the deck chairs on the Titanic.
by Robert Nelson, MD
The formula for excessive Healthcare spending:
Most healthcare $$ resources tied up in premiums/billing cycle + lack of price transparency + Patients chasing benefits + Doctors chasing billing codes + No incentives to care about costs + Small Direct Pay market + Treatment Bias + Defensive Medicine + Unwise public policy and tax laws =
EXCESSIVELY HIGH SPENDING with low health value and low economic value.
Affect change where you can.
Pass it on.
By Robert Nelson, MD
Despite its own admission that Flu Vaccine is, at best, only 40 – 60% effective at reducing risk of Flu-like illness, the CDC repeatedly lists receiving the Flu vaccine as “step one” in prevention. This recommendation also acknowledges the caveat that the effectiveness of immunization will be less if the vaccine is not well matched to the dominate circulating strains of Influenza in any given Flu season. Yet Medicare has deemed it so important that they cover it at 100% despite its low cost and not-so-stellar prevention record.
Given that the mode of transmission of Flu is mainly person-to-person contact, it should not be a surprise that the next bit of preventive coaching that the CDC offers to patients with suspected Flu (and probably the most important admonition) is to STAY HOME.
This advice to “stay home” is very important to curb the spread of the Flu, because it is quickly passed by large-droplet particles that result from coughing, sneezing or blowing your nose. The range of these briefly airborne particles is about 6 feet. But once they land on a surface, these virus laden particles can remain infectious for many hours. Considering the short incubation phase of about 2 days, Flu can spread exponentially if a short time.
With these facts in mind, does a typical crowded waiting room in an urgent care facility or doctor’s office during Flu season make any sense at all? Those who have been tracking this know that the number of patient encounters this year for Flu-like illnesses is off-the-charts high.
Yet despite Grandma and the CDC telling us to eat our chicken soup and stay home, we see the opposite behavior by many patients. It seems odd to me that people would do this voluntarily, let alone eagerly, if they had a reasonable alternative for treatment. But it seems there is a paucity of alternatives and/or an unwillingness to utilize them.
Yet most of my colleagues agree with the CDC’s advice and few would argue that it is too cavalier or risky or depriving patients of adequate care. The subset of patients who are at high risk for Influenza-related complications are well delineated and can be selected out for more intense screening or special follow-up.
Let’s take a deeper dive into the reaction from large group providers. First, here is what they DO NOT DO.
I am unaware of any major vertically-integrated providers of outpatient medical services, who relies on insurance payments as their main source of revenue, which has signage on their door or any published educational information that discourages patients from filling up the waiting room; this is despite the obvious risks to patients and others! And most insurance-based practices do not overtly offer reasonable common sense screening protocols via phone, email or secure texting designed to triage those who need to be seen promptly and who can/should stay home.
Now consider how over-booked insurance-based practices and nurse advice hotlines respond to multiple patient calls about Flu-like symptoms? Too often is goes like this…”Oh, it sound like Flu, you should go to the urgent care to be tested and get Tamiflu if your flu test if positive!”
There are major flaws in this knee-jerk institutional advice which lead to bad decisions and a lot of unnecessary testing & treatment. First, the sensitivity of Rapid Influenza Diagnostic Tests (RIDT) is not high enough to be a reliable exclusionary test. And when prevalence of Flu is high, the predictive value of a negative test goes down as the predictive value of a positive test goes up (telling you what you already suspect). And when the clinical symptoms of the Flu strain are well known, the predictive value of the clinical symptoms in the face of exposure is often as accurate as testing (as proven by subsequent RT-PCR). Second, the benefit of Tamiflu in curbing symptoms after 24 hours of fever is less than impressive. While it does cut down on viral shedding, which may be its main attribute, the false sense of security that many patients attribute to the medication may lead to them returning to normal activity too soon or be less than diligent about taking adequate precautions. Third, if they do actually have the Flu, then by urging them to “get checked” we have potentially exposed other patients and the medical staff unnecessarily. And if they don’t have the Flu, they may catch it while waiting to see the provider for what is likely to be an unwarranted visit. Indeed, much of the intervention that is pushed, and expected, serves only to propagate and prolong the public health threat that we are alleging to mitigate.
Why do patient behaviors and practice patterns deviate so drastically from the common-sense advice that we all grew up with, the same advice that the CDC stresses? Once you over-come a few misconceptions about risks, along with setting some follow-up parameters, it all comes down to a misuse of what could otherwise be a useful financial tool that we call health insurance.
More specifically, it is the inefficient way we use health insurance for routine care that is ultimately responsible for the misuse. I call this process “Fee-for-Coding”. As my friend and colleague, Jed Constantz, is fond of saying…“this leads the patient to chase the benefits and the doctor to chase the codes.”
These two distractions arise from the perverse economic incentives faced by the provider and the patient within the Fee-for-Coding system. The consequence being that only perfunctory consideration is given to the clinical utility of the intervention because the financial incentives are not properly aligned; this often leads to inappropriate or excess interventions, inappropriate referrals, delayed care, or care rendered in the wrong venue.
Fee-for-coding (FFC) has wreaked havoc in healthcare due to three intrinsic characteristics, all of which increase costs and over-burden resources. Our FFC/CPT billing system causes: 1) price insensitivity on the recipient’s part leading to indiscriminate and excessive consumption on aggregate. 2) Misaligned incentives on the provider’s part leading to over-testing and over-treating. 3) Lack of important value-determining price signals between buyers and sellers due to lack of advance pricing capabilities.
Contrast that conundrum with a real scenario I had today which highlights the utility and effectiveness of patient-centered care rendered outside the confines of the third-party payer contract: A Direct Primary Care arrangement with ability to provide home visits when needed.
A married couple who are members of my practice also pay membership fees for their sons and spouses who work part-time in their family business. The husband’s mother, who is 88 years old and in reasonably good health, lives with them. She has a doctor in South Carolina whom she sees rarely for routine check-ups. She does not have a local physician and is not a member of my practice. She slipped getting out of the shower today, hitting her head on on corner of the wall resulting in a 3 cm scalp laceration without any other apparent injury; she is not on anti-coagulants and had no clinical signs of concussion. When they got to the local Urgent Care facility, they were told she could be “evaluated” but they would not stitch or staple any wounds above the neck! You know, kind of like a “dental monitor” who diagnoses cavities, but doesn’t fix them! They were advised to go to the ER or another UC that might possibly suture the cut if needed.
Did I mention that it is Flu season and the waiting rooms are packed full of sick people?
Following this revelation, her daughter-in-law sent me a text about the situation to see if I would be willing to see her. By this time, they had arrived back home. I called to discuss her injury and it seemed reasonably certain that there were no serious symptoms and no orthopedic injuries. I agreed to evaluate her at home to avoid an ER visit for what seemed to be a fairly minor, although time sensitive, injury which required evaluation the same day. I reminded them that I did not submit bills to Medicare and that my fee would be $80.00, and I would waive the travel fee since they were member patients.
So, after a brief discussion and history and brief exam, plus 5 staples to close the scalp wound and a 45 minute round trip… she is convalescing at home. The family is vigilant and they have my number for 24/7 access if questions or new symptoms.
Had she presented to ER, it may have meant a couple hours in the waiting room and exposed to all manner of illnesses. And based on her age and medical-legal influences, there is about a 40 – 50% chance that a head CT scan would have been ordered. So the bill would have been $1,000 – $1,200 on the low end, or up to possibly over $3,000 on the high end if CT was performed. Not to mention a very high chance of contracting Flu given the current high levels in the community.
Alternative payment models like Direct Primary Care (DPC), sometimes called membership medical care or insurance-free cash practices, don’t have to depend on billing encounters in the office to drive revenue. This liberates the physician and staff to provide the right care at the right time via the right modality; whether that be in-person, over secure texting app, phone, video or even a house call.
With DPC and similar practice models, the artificial constraints and moral hazards of insurance based Fee-for-Coding disappear, replaced by the satisfaction of helping to solve our patient’s problems as life happens and within a non-rushed, lifestyle friendly atmosphere.
People may ask, “How is it that no one in the UK-NHS was able to help her, but a guy in private practice in Louisiana could?” Such people have been conditioned to believe that government or universities are the sole source of innovation. This is far removed from reality.
Throughout the last 70 years, the U.S. has been the greatest mover and shaker in the world of medicine. Most major medical innovations have either been born or significantly developed here. And, many of the major innovations have come from small private practices—certainly not from the government. Innovative changes do not come from out of our universities—they come from individuals who work at our universities. However, true radical, transformative innovations have often come from private practices.
by Gerard J. Gianoli, M.D. http://EarAndBalance.net Free-market capitalism has brought unimaginable innovations to mankind in the last 200 years, more so than any other economic system in the history of the world: airplanes, telephones, personal…
You can take this to the bank. Every innovation in the production of every good or service – anything that lowers costs or increases quality – originates on the supply side of the market. There has never been a successful innovation that originated on the demand side.
This principle applies to health care in spades. For as long as I have been in health policy – more than 30 years – I have been dealing with non-doctors who have a deep, abiding desire to tell doctors what to do. Yet I don’t know of any example anywhere in the world where this approach has ever worked.
If the definition of insanity is repeating the same thing over and over again and each time expecting a different result then “insanity” is the appropriate word here. The Obama administration has spent millions of dollars on pilot programs and demonstration projects in a fruitless attempt to discover how to better practice medicine. It has spent millions more trying to herd Medicare patients into Accountable Care Organizations – super HMOs with financial incentives to hit quality measures. That hasn’t worked either.