Monday, August 03, 2009

Primary Causes

The following sentence from the report of the Massachusetts Payment Reform Commission caught my eye: "It is widely recognized that the current fee-for-service health care payment system is a primary contributor to the problem of escalating costs and pervasive problems of uneven quality." As mentioned below, I admire the work of this Commission, and I have no quarrel with the principles adopted by it, but I believe this particular conclusion is overstated. The characterization is risky in that it gives no relative weighting to other causes and may serve to take those other causes of the hook in terms of policy development. Some reading the report may think that if you change payment methodologies, it will make a sufficiently significant dent in the rate of health care cost inflation. I'm not so sure.

I recently had a chance to view the average annual medical cost inflation rate of a health system's capitated patient group over the last five years. It was ten percent. This was ever so slightly below the health system's fee-for-service patient group, and I am willing to concede that the payment system made a difference. But the point is that is was not a major difference. What might be the other "primary contributors" to the problems we are trying to solve?

Here's my list, produced with the benefit of no data, but just observation of what actually goes on in the four walls of our hospital:

1) Demographics. The huge cohort of baby boomers have now entered the age at which they are seeking hospital care. Meanwhile, their parents are living longer than ever and are coming to the hospital for both acute and chronic care.

2) Entitlement. The first cohort named above expects and demands everything for themselves, and of the insurance products they expect their employer to purchase. For their parents, they often expect extraordinary end-of-life care interventions, paid for by Medicare.

3) New stuff. See #2 above. A knee that previously would have remained sore in the past or be treated by physical therapy becomes a target for arthroscopic surgery.

4) The medical arms race. Physicians and hospitals feel compelled to buy the latest technology, even without proof of enhanced clinical efficacy.

5) Defensive medicine. Yes, the threat of malpractice law suits leads to over-testing and other extra costs.

6) Regional medical mythology. Thanks to Brent James for this insight. Local practice patterns often are just that, with no evidentiary basis.

7) Preventable harm in clinical settings leading to extended hospitalization and bodily injuries.

8) Lack of access itself. If people don't have health insurance and can't get proper early diagnostic and preventative care, they are a more expensive burden on society when they get sick.

9) The cottage industry problem. The medical profession, both in physician practices and hospitals, has failed to adopt process improvement approaches that are common in other industries, that result in redesign of work flow and systems to derive efficiency, quality, and standardization.

10) A sedentary and malnourished lifestyle for all age groups, leading to obesity and other associated physiological problems that are the precursors to major health issues.

In a post below, I outlined the things I would like to see in federal health care reform legislation. Those don't address all of the causes mentioned above, but we should not expect a new law to do so. We can fix some of our inadequacies through legislation, but many components of our problems lie deeper in society.

P.S. While there are pro's and con's of each country's health care systems, similar cost pressures have become evident in much of the rest of the world. Perhaps this suggests that a common organism underlies our problems, homo sapiens and its curious ability to live longer and expect more.


Anonymous said...

Excellent list; can't disagree with a single thing you say. But enacting payment reform and tying it to quality in some way will incentivize docs to deal better with almost everything on your list. I read an op-ed by the Gov. of Minnesota (today's Washington Post editorial section) that indicates their system has had some success with getting patients to pick higher quality and more cost effective "clinics", but I am not familiar with it. I am wondering how they measure quality.....


me said...

Nicely written, Paul.

Dustin Lipson said...


Thank you very much for your transparency and effort in writing this blog. I find it inspiring and unquestionably informative.

You imply that THE alternative to fee for service is capitation and go on to conclude that because capitation didn't result in major savings over fee for service, fee for service is not a major cost driver. There are other models besides capitation, like pay for performance (i.e. process), or even better pay for outcomes, or bundled payments for the treatment of a condition? Is it not possible that these payment models could yield far better results than capitation or fee for service substantiating the claim that FFS IS a major cost driver?

On a separate note, I have one more potential addition to your list: Indication Creep. THCB had a good post using lap choley as an example.
How big of an issue is this in your opinion?.

Anonymous said...

I think most people outside the medical profession understand that the current system is not sustainable and needs a change.

Unfortuantely, I see many people within the medical profession pushing for the system to stay in its current form. This is orbably due to the unknown of its effects on care, financial unknowns and personal feelings that the current system is not broken.

How do you get everyone pointed in the right direction?

Anonymous said...

I would add the administrative costs of unfunded governmental mandates applied without evidence that they improve care.

The last post about providers greed and bias typfies the problems we will have to fix health care in this country. Those who curiously believe that they understand the motivations and abilities of health care providers without experience predictably propose delusional solutions. They assume that the problems lie with the providers and that all will be well if they are better controlled and held accountable. Yet these people still hope to rely on medical professional ethics to get providers to perform as they create impossible working conditions. Curiously again they do not believe these ethics exists in a fee for service model. Their plans do not allow providers the authority or means to control cost. There is little being proposed to change the expectations of patients and their families in terms of choice and end of life care. There is no discussion of tort reform needed to empower the physicians to say no to interventions that are desired but do not help. There is no message to the public that choice and cost do not go hand in hand and that healthier life styles are the best path to fixing health care. There is no thought that more administrative work that it takes to demonstrate performance(we already do nearly 10 fold more of this than our europeen counterparts) does not necessarily yield better results but does increase cost.

Most of of the physicians and nurses support the urgent need for change but, from the vantage point of the front line, actually have a good view of what might work and what will not. Dismissing this input as reactionary and biased ensures that things will get worse not better.

Barry Carol said...

I wonder how the number of hospital inpatient bed days breaks down between Medicare beneficiaries and the under 65 population, what percentage of the total bed days are attributable to end of life care (broadly defined), and how has the patient and care mix changed over the last 10-20 years either at BIDMC or among hospitals more generally?

Separately, the 10% growth trend even with capitated payments is discouraging.

RalfLippold said...


nicely written and it perfectly describes why in healthcare (pretty much as in other public fields, like fire protection, energy) the so called "policy resistance" kicks in.

"Policy Resisance", coming from a system dynamics term, means that there is a rather complex, fuzzy and especially resources demanding. Even after setting the most brightest scientists and experts on the case the state of betterness doesn't hold for (if at any).

John Sterman, Head of System Dynamics Group at MIT Sloan, scholar of Jay W. Forrester has given a great speech at NIH on this issue focusing on healthcare (in 2007 prior to 50th System Dynamics Conference).

Looking forward to hear more voices on the issue that is definitely not only troubling the U.S.. In Germany and -I guess the rest of the world- we are going through similar times.

Best regards


Frank Bauer said...

I especially like #10 and would put it higher in the list. There is only so much we can do to overcome biology, even though we act like throwing more money and science at a health problem can solve anything.

US spending on the first/last six months of life and the high concentration of spending on very few individuals are two great examples of this.

Chris G. said...

I think the one of the morals to this well written post is that the cause of our "healthcare crisis" can be attributed to no one singular problem. It is frustrating to me to hear people make claims that healthcare costs are high because of "X" (malpractice costs, greedy insurance companies, payment structures, etc.) and if only we could change that, our problems would be solved. The reality is that while fixing any item on the list in isolation may yield some marginal cost savings, true, long-term cost savings will require a comprehensive, well thought out overhaul of the system. Unfortunately, nothing currently under discussion fits this bill in my opinion.

Anonymous said...

Was the health system negotiating their cap rate into an environment with escalating costs, perhaps at their peril? If the groups, hospitals, docs, etc., were utilizing resources on the capitated side like they were on the FFS side, and the system more or less paid the commensurate "bundled" prices, well, I think you see where I am going.

The question then is, why did they pay these rates? The answer may not lie with the "bundling" approach (as i dont see this as a failure just yet), but with the external effects of a volume-driven system, which happens to permeate everything it touches.


Engineer on Medicare said...

Big cost savings could be made by involving the patients, especially in chronic care. Much of it is related to prescription drugs.

1. If I didn't have Medicare Part D I would be forcing the issue to evaluate using a generic statin instead of Lipitor.
2. Had a tick bite that looked a lot like a deer tick, which is prevalent in my area. Dr. wouldn't prescribe the recommended prophylactic Doxycycline without a visit + analysis of the tick + ordered a blood test after several weeks (Total about $200). After a long speech about the risks of Doxycycline I asked what he would do and he prescribed the DX. If I could have gotten it I would have gone to the the pharmacy and bought a pill which has a value of about 50 cents.
Even if the tick would not have infected me the cost of the pill is small compare to the treatment for Lyme disease.
3. Before I had Medicare D I got my hypertension scrip changed from Norvasc + diuretic to atenolol + diuretic, which is controlling BP very well.
4. About once a year on average I get a lower back sprain from lifting or movement; and a Medrol Pack works miracles. However, I can't get it without a visit to my primiary (otherwise see him twice a year). Net cost to Medicare about $85 instead of $5 if I could pick it up at the pharmacy.

I have Medicare F supplement which eliminates co-pays so that is not a consideration. Maybe insurance to cover co-pays should be eliminated to give patients an incentive to avoid unnecesssry usage.

Jerry said...

Here's my list, produced with the benefit of no data, but just observation of what actually goes on in the four walls of our hospital...

Paul, you might have better structured this sentence to convey that your list was produced with the disadvantage of no data.

Unless the lack of data is actually a benefit in some wacky parallel universe.

I think I see what you're trying to say, and some of my own observations over the past 33+ years are consistent with yours (while others are not), but seriously - what would you think if you heard someone in a position of responsibility say that they had some ideas or recommendations for addressing the needs of a complex system based on their own casual, incidental, or even somewhat focused observations and gleaned anecdotes?

A post like this needs a much bigger disclaimer, IMO.

And, finally, yes - you've only done something that many of us do, that I often do, namely synthesize some necessarily limited observations, make a few inferences, and draw some conclusions, mainly in a good faith effort to get a grip on circumstances.

It's a start. But only a small one.

Meanwhile, I came across an interesting tidbit today -

"...during the second quarter alone, AHIP, the health insurance industry's political arm, has bankrolled anti-reform efforts to the tune of at least $133 million. To put the insurance industry's largesse in perspective, they spent about as much in the second quarter as the Bush-Kerry campaigns spent in the 2004 general election combined and 50% more than the Obama campaign's quarterly average."

I know Jim Roosevelt wrote a comment here once last week. I'd be interested in hearing his take on this one.

Anonymous said...

Jerry, I might have written it that way, but I chose to write it the way I did. A little humor perhaps? Some might think so, some don't.

Disclaimers? Please. I could spend my whole life writing disclaimers. They would make things oh so tedious. I think people read what I write here for what it is and draw their own conclusions.

Jerry said...

Hi, Paul.

I think you're being disingenuous with that reply.

That's obviously just my opinion, because I can't read your mind.

But, seriously, as the President/CEO of a major Boston teaching hospital, I have to think you understand that your words about issues like health policy might carry a certain weight with some readers.

Heck, some might even quote/link to you as evidence to support their own views and conclusions - views and conclusions that you might disagree with, or even find objectionable.

The idea I'm touching on here is similar to the comments that you recently made about the photo of the President sitting at the robotic surgical device - do you see what I mean?

Frankly, that's one of the things that surprises and intrigues me about your blogging in the first place - you're open about your identity and role, you've shared some information about your institution and some things that are going on there, and I often find what you write to be very informative and thought-provoking.

What you're doing can be described as very transparent. I favor transparency.

I also think it's kind of high-risk, but it's obviously not for me to decide what risks you will and will not take.

Similarly, I expect that you exercise caution and judgement about what you choose to share versus what you withhold.

Still, I wonder if you agree with me that it may be very simple, even too simple, for readers to perhaps make some assumptions about some of the things you say, and whether or not they reflect the views of the institution you head, or of one or more of the narrower subsets within it - the executive committee, the board of trustees, your fellow CEO's in Boston or elsewhere, others in similar positions in the larger industry, etc.

I'm just thinking out loud here. There may be some spot between the two extremes of spending an entire life making disclaimers, and never making any.

I've also had a chance to observe what you have, and have not, responded to - both with regard to my own comments as well as to comments made by others. Again, I'd expect that has to do with matters of personal judgement and your assessment of risk, etc.

Heck, you might even think that some of the comments I've made don't merit a response.

But here's a question for you, and I'd appreciate a response - even if it's to the effect that you choose not to respond:

What do you think of the item I posted above, specifically reports of the large amounts of money that AHIP has spent on lobbying and other activities to oppose proposals to reform health care financing (most likely focusing on the 'public option')?

Also, I don't have any figures or information about what AHA has spent, or is doing. Do you?

Thanks, Jerry

Anonymous said...


On your last question about what I think about lobbying expenses, I expect there to be huge amounts spent by all kinds of interest groups. Health care is 1/6 of the American economy and involves tons of interests. It is a fact of life that money is spent on lobbying. I personally don't spend time fretting about that, although I know others do.

On your major point, all I can say is that I write what I write because I think it might be interesting and informative. I make it as accurate as I can based on my knowledge, beliefs, and inclinations. But, Jerry, this is a blog. It is not an academic journal with peer review, nor a newspaper with editorial review and fact-checking. It is just a blog. In it I speak for myself, only. I fully expect members of the BIDMC staff and Board members will disagree from time to time (or often!), but we have an open culture, one that supports discussion, argument, and dissent.

And sometimes, I even insert hints of humor, but there, too, some may not get it or appreciate it. That's life in the blogosphere!

Anonymous said...

Haha, Jerry; you remind me of myself a couple years ago. I remember dispensing a bit of "advice" myself to Paul when I first started reading his blog regarding posts I thought were a bit "out there". But as you become a faithful reader, you will see there is a method to his "madness" and he, in fact, is actually brilliant both intellectually and politically. Medical friends to whom I have quoted him say they wish they could work at BIDMC!
And this comment is coming from someone who has very little use for hospital administrators, in general.
And no, he didn't bribe me to say this, LOL!

nonlocal MD

Engineer on Medicare said...

An interesting opinion in the LA Times weighing in on the debate from a pharmaceutical company point of view.,0,2599612.story

Jerry said...

for nonlocal MD August 04, 2009 5:49 PM

Well, you sound like quite a fan.

I don't give advice. I do offer my opinions, and indicate agreement/disagreement if/when indicated.

Jerry said...

Part 1

On your last question about what I think about lobbying expenses, I expect there to be huge amounts spent by all kinds of interest groups. Health care is 1/6 of the American economy and involves tons of interests. It is a fact of life that money is spent on lobbying.

Thanks, Paul, but you're not really responding to my question.

I asked specifically about AHIP's reported second quarter spending. Maybe Jim Roosevelt would be in a better position to comment on AHIP, but aside from making one comment here recently, I don't see that he blogs much.

Anyway, AHIP's reported to have spent over $133M just for Apr-Jun 09. I think that's a big chunk of change by any measure, and it needs to be looked at in context. I expect AHIP's 2Q09 spending on lobbying and other related activities is higher than they were, say, in 2Q08.

Why do you think that is? What interests do they have? Are they trying to protect something? Are they fighting to get something changed?

And what kinds of activities are they spending it on? Where's the money going?

I also expect AHIP's raw amount far exceeds that of many of the other interest groups you referred to. What other groups can mobilize that kind of cash?

Probably the pharmaceutical industry, perhaps the hospital industry. I doubt that the AMA can fund lobbying at an annual rate of over a half-billion dollars, and I know the American Nurses Association can't even dream of coming near it by a few orders of magnitude. The only other entity that even comes to mind with regard to spending on Capitol Hill is AARP.

I suppose somebody could try to argue that it's better to look at spending by the various "tons of interests" in relative terms - that the ANA's $X represents Y% of their overall budget, while AHIP's $Z represents Y-Q%, etc., but I think that would be wrong-headed because this is more like sumo wrestling than anything else - sheer weight usually carries the day.

So, if I take your initial answer to mean something like, "Hey, stuff happens. Whaddya gonna do?" then I think you're avoiding the issue on several fronts.

Obviously, not all interests are the same. They have competing objectives, and I think those objectives need to take front and center.

For example, my interests as an individual whose conscience requires him to consider the crisis of the un-insured, the under-insured, and those who've had their health coverage rescinded, certainly conflict with those of an organization whose members are in business to earn money for their shareholders, and who pay its senior executives more than you'll ever see at BIDMC.

I think your response establishes a false equivalency, and reflects a blithe assumption that everybody's just going to fight it out because that's what they always do and things just happen because "it is a fact of life."

Well, that's what I understand your answer to be, anyway. I could be wrong.

Am I wrong? Do I misunderstand your answer?

Jerry said...

Part 2

With regard to I personally don't spend time fretting about that (money spent on lobying), although I know others do. I'm not sure I understand what you mean by "fretting."

My good friends at say "fretting" means to feel or express worry, annoyance, discontent, or the like and that to fret is To be vexed or troubled; worry.

Is thinking, or raising questions about, or analyzing an issue the same thing as worrying about it?

Someone could look at that what you've said and even wonder if you're implying that the worrying, if you do mean worrying, is somehow irrational, or that it's a trivial matter you simply can't be bothered with yourself.

I don't know. Maybe this is an example of you trying to be funny, to insert "hints of humor," and I just don't get or appreciate it.

Life in the blogosphere, eh?

Lynn Nicholas said...

Paul thanks for elaborating on the complex and multifaceted reasons our healthcare system needs systemic reform. I think you’re right on target, but do feel payment reform linked to quality, as mentioned by one of the posters, is an especially critical lever for change. Did you see the story in the Wall Street Journal, about the challenges facing one of your peers, David Phelps at Berkshire Health System in Pittsfield? Every hospital in MA, and in fact the nation, can relate to this. The payment reform I envision would change the healthcare landscape for both providers and patients. We all have to change the way we view and engage in order to have a truly effective system. Thank you again for your thoughts.

Logan said...

Hi Jerry,

Just out of curiosity, do you ever cite other websites besides DailyKos? That's a rather biased source of information...not, of course, that all aren't, but I am a bit curious if you look at other sources besides just one of the prominent leftist sources. Personally I try to follow right, left and centrist websites and news sources...generally speaking I tend to even out in the middle, but I try not to limit what I look at. I have nothing against DailyKos really, just wondering.

Paul, you may find this article interesting:

Jerry said...

Hi, Logan:

I disagree with your characterization of DailyKos.

Calling it 'rather biased' and 'prominent leftist' strikes me as superficial and misinformed. That's the same language Bill O'Reilley uses on Fox "news," and he's a moron.

I mean, there are plenty of people who'd say the same, or worse, about your New Yorker citation.

It's important to understand that DailyKos is a community, where registered members contribute the content and engage in discussions.

I think there are currently about 250,000 registered members at DailyKos. I registered in 2004, when there were less than 20,000.

The site gets about a million unique visitors daily, and traffic really peaks around election time (though things are busy there now, too).

The 'best' content at DailyKos, meaning the content that the most members have found useful, informative, thought-provoking, etc. sticks around the longest.

Free-market advocates would recognize that phenomenon.

If you've followed any of my links there, you've probably noticed that the best content generally includes extensive links to external sources, just as you'd include citations and footnotes in an assignement.

I like that.

There's certainly a set of shared interests and values at DailyKos. That's what makes it a community.

But to call it 'biased' or 'leftist' is to both misunderstand what the site actually is all about, as well as to engage in intellectual laziness.

I use DailyKos as my primary jumping-off point for news and information, and at the risk of sounding like a braggart, I consistently find myself much more informed about a range of issues than others because of it.

Finally, I personally don't see any value in seeking information from "left," "right," and "centrist" sources.

Those labels are meaningless, to begin with, as labels usually are.

And I disagree with the basic notion behind your statement.

While I agree that it's important to analyze and synthesize a range of information to develop an understanding and a point of view, I disagree with the assumption that all sources are equal, and that by combining "left, right, and center" in the proper proportions a person can somehow arrive at a coherent or defensible conclusion.

All sources are not equal.

Finally, though your final comment wasn't directed at me, I think Atul's piece cuts to the chase on the impact of physician behavior and its effect on cost.

Good luck at Cornell.

Jerry said...

PS, Logan:

You (and anyone interested in health care news) might want to follow this physician's very good roundup, which he posts every Tuesday and Saturday.

Anonymous said...


Sorry, being a little technically challenged, I don't quite understand the link in your comment above. The Daily Kos is noted in Wikipedia as
"Daily Kos (pronounced /ˈkoʊs/) is an American political blog, publishing news and opinion from a leftist point of view."

Are you referring to that as the recommended source, or to the "Health Care Saturday" published within it by DemfromCT?


nonlocal MD

Jerry said...

nonlocal MD August 08, 2009 9:05 PM

DemfromCT is a physician who posts summaries of healthcare-related news each Tuesday and Saturday.

He also posts analysis of polling data, which appears to be another area of interest for him.

And he recently posted interviews with the presidents of the national association of physician assistants and the national association of nurse practitioners, as part of his overall interest in health matters.

The contributing editor who writes under the name mcjoan (Joan McCarter)is currently writing some very good health policy analysis, as another example.

I think DailyKos is an excellent source for information and analysis. That's my opinion, anyway.

I don't know if this answers your question.

But, seriously, Leftist? Wikipedia?

From your example, it sounds like Bill O'Reilley may be submitting material there.

Anonymous said...

Hey, I don't write 'em; I just google 'em! (:


Logan said...

Hi Jerry,

Thanks for the response, and sorry for the delay. A few brief comments:

All sources are not equal.

No they aren't. My point there was that it is not helpful to consider viewpoints from only one ideological perspective. It is true that liberal, conservative, etc are only labels, but they are still ideological barometers, that are not completely useless. I still maintain that it would be healthy for anybody to read some thoughts from different perspectives. Nobody and no particular ideology has a monopoly on truth, and I think extremes of any ideology are unhealthy...hence the need for balance.

That's the same language Bill O'Reilley uses on Fox "news," and he's a moron.

How is such a casual dismissal of O'Reilly not what you would call intellectual laziness? FWIW, I don't like the guy myself but I have to concede he's not always wrong anymore than his 'opponents' are always right.

Lastly, I have to disagree with your assessment that DailyKos isn't leftist. Perhaps 'liberal' or 'progressive' would be the better word, but I looked through the bios of the contributers and they are virtually all Democrats or progressive activists of one form or another.

While there may be a spectrum of thought on the site, this spectrum overall still seems pretty 'left of center' to me. That means the site is 'biased'-I don't use the word pejoratively and I apologize if it came across that way, but the general perspective (bias) of the site seems to undeniably be progressive. I hope I don't come across as bashing the site, as that's not my intent.

Best regards,


Jerry said...

Hi, Logan.

I understand what you’ve said.

But I think you’re using the meaningless term “leftist” when you’re talking about people better described as “activist.” It’s all about action - making things happen.

Just ask Paul.

My main interest about any source of information is its proven credibility. I want to hear from people who know what they’re talking about.

I’m very comfortable with the writers/editors I follow most closely at DailyKos. They know exactly what they’re talking about, because they’re experienced in the fields that they write about.

And that includes topics ranging from health policy to the environment to elections to the legislative process to investment banking, and plenty more.

They’re experts who write well, as opposed to writers who try to cover topics that they have a passing knowledge of, at best.

Sure, there are exceptions in the corporate press – I think Jane Mayer reports very thoroughly about national security, for example. She knows her stuff. Ditto for the McClatchy reporters at Nukes and Spooks.

But I find people like these to be the exception, not the rule.

As for calling Bill O’Reilly a moron, well, that’s what I think he is. Based on everything I’ve seen from him, he’s just a mean-spirited, small-minded, and demagogic entertainer.

Finally, I’ll be joining my DailyKos friends, and others, starting tomorrow

Good stuff, man. Good stuff.

Logan said...

Congrats on the NetRoots!

I'm not arguing with about O'Reilly, although I'd still take him over Laura Ingraham! :)