The ACP Advocate Blog

by Bob Doherty

Thursday, May 27, 2010

Do we really want Washington to control health care spending?

As I have traveled around the country giving talks to physicians about health care reform, I am often asked if the new law does enough to control costs - usually by doctors opposed to it.

As I wrote in a Perspectives article that appears in the current issue of the Annals of Internal Medicine, the jury is out, mainly because the most significant cost control initiatives in the law will first be launched on a pilot basis. Although initiatives like Patient-Centered Medical Homes, Accountable Care Organizations, bundled payments, wellness and prevention programs, quality measurement and reporting, and comparative effectiveness research might begin "bending the cost curve," well-respected experts disagree if they do enough.

The more I think about this question, though, the more I wonder if we are looking to the wrong place for the answer. Do conservative critics, especially, want Congress to do more to control costs? Especially since government cost controls usually involve blunt instruments like price controls, cuts in payments to physicians and hospitals, and direct and indirect limits on access to treatments?

Instead of looking to Washington to "bend the cost curve", perhaps we should be looking at the cultural factors present in many of our own communities. As Atul Gawande wrote in his now famous article about McAllen Texas,

"Health-care costs ultimately arise from the accumulation of individual decisions doctors make about which services and treatments to write an order for."

Gawande argues that the differences between high cost areas, like McAllen, and lower cost ones, like Grand Junction, Colorado, have more to do with the culture of medicine - "whether the doctor is set up to meet the needs of the patient, first and foremost, or to maximize revenue."

In an interview with Ezra Klein, Gawande was asked about the most effective counter arguments against his piece. Gawande replied:

"The idea that these people in McAllen are unhealthier. The idea that it's all malpractice ... [and] pointing out that McAllen is the poorest county in the country. They'd say you couldn't compare it to Mayo. But I didn't. El Paso, which I did compare it to, was the sixth poorest in the United States. They're very closely similar in poverty, in immigration, in physician supply, in rates of disease, and so forth."

(I would add that it is counter-intuitive to say that the malpractice suits are the culprit, since Texas has a state-wide cap on non-economic damages. And yet some parts of Texas spend much less than McAllen, even though the liability cap is the same.)

But is it really fair to pin the blame on physicians for how much the country spends on health care, when patients themselves create demand for more health care when they don't take care of themselves? This makes intuitive sense, until you look at Provo, Utah.

The Washington Post reports:

"If there is any place that should have medical spending under control, this is it. Residents of Provo, many of them Mormons who don't smoke or drink, are among the healthiest in the country... Until recently, Provo seemed to be a model for the nation. But spending on Medicare patients here has accelerated rapidly, as it has in many other areas of the country that are known for cost-efficient care. The culprit: a swift increase in the number of procedures and tests being performed - a trend that has coincided with the additions of new surgical and cancer treatment suites and diagnostic machines at hospitals and clinics throughout the growing region."

(National Public Radio headlined its story on Provo this way: "Provo Leads the Nation in Osmonds and Shoulder Surgery.")

Now, I am not picking on the undoubtedly good people, doctors and patients alike, who live in Provo or McAllen. But it does seem to me that the answer to "bending the cost curve" is going to have less to do with federal legislation than changing a culture of medicine that encourages over-use of health care services, which seems to be linked, at least in part, to physician ownership of diagnostic facilities - something found in both Provo and McAllen, communities that couldn't be more different, except that they spend more per patient.

Changing culture has less to do with the federal government than physicians showing leadership at the national and community levels to re-define what are acceptable practices - what Gawande calls "a battle for the soul of American medicine" - which when you think about it, is a fundamentally conservative idea.

Today's questions: Do you think we should look to Washington "to bend the cost curve" or to changing the culture of medicine in our own communities? And if is culture, how can it be changed?

7 Comments :

Blogger james gaulte said...

Has not PPACA in effect turned the job of cost control for health care cost over to the federal government particularly in regard to the soon to be very powerful IPAB whose pronouncements will impact not only governmental spending but private spending on health care as well.Has ACP's support help set in motion the wrong system to control cost?

May 27, 2010 at 2:20 PM  
Blogger Steve Lucas said...

This is a complicated issues and it starts with the patient. I often read on various blogs people posting how as an “American” they have the right to any and all test that may in the remotest possible way find a health issue that maybe might impact their life.

You simply cannot test in this manner in an economically sane fashion.

Secondly, the current payment system pays for test and procedures. This means we have a lot of test and procedures, needed or not. Here in Canton, Ohio we are ending a two month hearing on the business practices of one of two nonprofit hospitals. The issues at hand are the kickbacks paid by one nonprofit hospital’s wholly owned for profit insurance subsidiary to insurance broker for switching clients to its plans.

Testimony was far ranging. Of interest to this discussion is the vertical integration of this closed system. People with this insurance may only see affiliated doctors and affiliated doctors may only refer to this one hospital. The hospital also paid one group a $25,000 per doctor fee for exclusive referrals.

With a large Medicare population and secondary insurance provided by union contracts testing and procedures are endless with the right, or wrong, insurance, depending on your view. The proof of how lucrative this business model is the constant and continued expansion of the one hospitals physical plant along with satellite facilities.

We have to move away from the business model that all medicine is first and foremost a money making operation. Yes, the people involved need to be compensated for their skills. Yes, institution need to more than break even to sustain their operations.

The real issue becomes: Do we treat medicine at all levels like any for profit entity; Enriching a small group of senior managers while maximizing income and profits, with no regard for the client/customer, often called the patient.

My personal view is the local hospital is the cost driver in our current medical system. With the ability to fund doctors, and set standards, it controls cost at the most basic level, exceeding the control of pharma and the insurance companies themselves.

Steve Lucas

May 27, 2010 at 2:51 PM  
Blogger Robert J. Sobel, M.D. said...

Absolutely we need Washington to bend the cost curve. I'm sure a lot of good medical intervention takes place in Provo. I'll leave it to them to supervise. Regardless of where we practice, we are all beholden to the practices of others in the health care industry. This 2 + trillion dollar complex spends more on direct inpatient care than outpatient. It also let the pharmaceutical side grow well beyond 10% (in excess of $300 billion retail plus all the bureaucratic hassling that remains the number one assault on patients and prescribing physicians).

The current price discrepancy between two effective diabetes drugs (one on the market in Europe and Canada for over 50 years and still being investigated for new roles [i.e., metformin]; the other a once-daily injectable that promotes weight loss and is an analogue of a gut hormone given supraphysiologically [i.e.- liraglutide, Novo-Nordisk's Victoza]) is almost 100 fold. With these kinds of cost distortions, it becomes impossible to focus on doctors when trying to control the cost curve.

New drugs and technologies must be price regulated in Medicare. Figure out how to do that and fix the SGR and set some sort of careful reassessment mechanism. There is no way to hassle us more and expect anything to improve. Pay us fair and pay them fair.

I am not anti-innovation, but it is absolutely untenable to say we must direct the cost savings when the whole design of the Hatch-Waxman dichotomy makes what is cost effective swing back and forth. The only solution is to eliminate the bureaucratic tangles and failed efforts emanating from restrictive formularies and PBC hassles. I wouldn't spend $5-10 per day for pill or shot. No one should have to.

May 27, 2010 at 8:12 PM  
Blogger ray said...

Funny you write this because ACP never fought hard for the efficient doctor, cognitive medicine was dying for past couple decades under ACP watch. Culture will change in the direction of money, it is as simple as that. Show the money and practices will follow, no brainer.
If suddenly tomorrow cardiac stent is worth 100 dollars and HBA1c of 6.5 is worth 600 dollars you see more HBA1c of 6.5 and overuse of stents will disappear.
Doctors like taking care of patients and being compensated well.

May 27, 2010 at 9:48 PM  
Blogger Harrison said...

Cost control will happen because of economic forces, and it will involve Washington top down mandates, and also insurance company mandates, and local physician practice pattern changes, and also patient expectation changes.
Locally in our IPA I'm aware of two initiatives which are changing practice patterns and expectation, and costs.
Individual primary care physician groups are policing their own referrals. This is cutting down on referrals to specialists which formerly were approved without much thought.
No longer are cardiologists co-managing stable congestive heart failure patients. Fewer diabetics are going to endocrinologists. The cost reduction to the payers after one year of implementing this has been in the 10 to 20 percent range.
Also there is a pilot program to have heart failure patients enrolled early into a Hospice program. The result so far has been a dramatic decrease of around 50% in CHF admissions. The cost savings for this group of patients has been impressive.
It is just a matter of time before such changes become expectations.
It is unlikely that this will result in a lot more money going into primary care.
It is likely that less will go towards procedures and hospitals and specialists.

None of this compromises care in any measureable way.

The cost curve will be bent.
Economic forces nationally, globally and locally will require it.
The competitive advantage will favor those groups that can significantly bend the curve without compromising safety and patient satisfaction.

Harrison

May 29, 2010 at 4:04 PM  
Blogger Owen Linder said...

Reverse the incentives; align incentives with the patient and physician; it works-
and when it doesn't look at the anti monopoly trust busting provisions of the law.
employ the sentinel effect to enforce adherence to standards.
it will work.
I see it work
accountable care is a neat idea looks good for those fearful to be at full risk but wanting to be aligned with proper cost effective care

May 30, 2010 at 3:14 AM  
Blogger enthanna said...

Excess capacity creates increased utilization. For a healthcare system growth and increased market share usually means new investments. If you spent millions on a new MRI machine, you will make sure it is used. From an ordering provider perspective, ordering tests is easier and less risky than cognitive assesments. So as long as the tests are available, we will order them. We also want the "BEST" and the latest and greatest for our patients. Patients need to help us define what is of value that is worth paying for.

May 31, 2010 at 3:02 AM  

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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