October 8th, 2011 by Stanley Feld, M.D. in Health Policy, Opinion
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Mechanism Design has demonstrated that the most efficient systems are created when everyone’s vested interests are aligned.
“An example is defense contracting. If you agree to pay on a cost plus basis you have created incentive for the contractor to be inefficient.
The defense contractor will build enough extra into a fixed price system to account for cost overruns. The cost overrun would be permitted in the rules if the price was transparent. If there were no cost overruns the contractor’s profit would be increased. It would provide incentive to be efficient.
“If you agree to pay a fixed price, you can come close to an efficient price if you have all the truthful information.”
A reader wrote,
Stanley:
History has proven over and over again that only the market mechanism of willing sellers and willing buyers is the optimal way to allocate economic resources. This presumes an informed buyer, and a willingness of sellers to compete for buyers. Adam Smith was clear on this in the Wealth of Nations.
If incentives are aligned and truthful price information is available an efficient system is created. Most stakeholders think they can do better by not sharing truthful information. If the rules of the game require truthful information the system can become an efficient market driven solution.
The healthcare system must become market driven. At present Read more »
*This blog post was originally published at Repairing the Healthcare System*
September 28th, 2011 by Stanley Feld, M.D. in Health Policy, Opinion
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I have opposed Medicare’s use of claims data to evaluate the quality of medical care. Quality medical care is the goal that must be achieved. However, no one has described the measurement of quality medical care adequately.
Physicians recognize when other physicians are not performing quality medical care. Physicians recognize when another physician is just testing and performing procedures to increase revenue.
These over testing physicians are a small minority of physicians in practice.
Quality medical care is not about doing quarterly HbA1c’s on patients with Diabetes Mellitus. Quality medical care is about helping patients control their blood sugars so their HbA1c becomes normalized. It is about the clinical and financial results of treatment.
The clinical and financial results depend on both patients and physicians. Patients must be responsible for Read more »
*This blog post was originally published at Repairing the Healthcare System*
September 19th, 2011 by Stanley Feld, M.D. in Health Policy, Opinion
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As we get closer to January 2012, the originally scheduled implementation date for Accountable Care Organizations (ACOs), the time has come to reexamine the showpiece of President Obama’s Patient Protection and Affordable Care Act (PPACA) of 2010.
The final rules for ACO’s are now scheduled for release on January 2012. The implementation was originally scheduled for January 2012. As the original rules are being studied and interpreted the program for ACOs implementation became more confusing. Dr. Don Berwick (CMS Director) has refused to discuss the final rules until they have been published in the Federal Register.
“The ACO program is based on the hubristic assumption that the federal government can design the best organizational structure for the delivery of care, foster its development, and control its operation for the entire country.
The federal government has big-footed health system reform. Although there is no one right way to organize care, the federal government (Dr. Don Berwick and President Obama) thinks it has found one—and exerts top-down, bureaucratic control through PPACA to implement it.”
ACOs are supposed to be organizations that improve coordinated care. If an ACO decreases the cost of care Read more »
*This blog post was originally published at Repairing the Healthcare System*
September 13th, 2011 by Stanley Feld, M.D. in Health Policy, Opinion
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Patients are first. Patients are the reason for the existence of the healthcare system. Physicians are second. They are trained to understand the pathophysiology of illness and to treat patients for their disease. Everyone else is a secondary stakeholder (provider).
All the stakeholders create waste in the healthcare system. If an accurate analysis were performed, most of the waste and the resulting profits would be attributed to the secondary stakeholders. Patient and physicians drive this waste and profits into the hands of the secondary stakeholders. Neither patients nor physicians are aware of driving the waste and profit into these stakeholders’ coffers.
The patient-physician relationship should be a one on one transaction. Patients and physicians are frustrated and many have accepted the disappearance of this human-to-human interaction.
Healthcare insurance companies and hospital systems think they own the patients and the physicians. This will turnout to be a fatal misperception.
To many observers of the healthcare system Read more »
*This blog post was originally published at Repairing the Healthcare System*
September 6th, 2011 by Stanley Feld, M.D. in Health Policy, Opinion
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I have described how the healthcare insurance industry loads its expenses into direct patient care expenses to increase their profits.
The Medical-Loss Ratio calculation is not reported by the traditional media. The healthcare insurance industry spends less healthcare dollars on direct patient care after it is permitted by federal and local agencies to load its expenses into the direct patient care column.
Simply put, the healthcare insurance industry cooks the books to increase its net profit.
Another way to increase profits is to shortchange physicians on medical claims. In fact, 20% of medical claims payments are inaccurate according to the American Medical Association’s (AMA) fourth annual National Health Insurer Report Card. Claims-processing errors by health insurance companies waste billions of dollars and frustrate patients and physicians.
This is one of the reasons the RAND report about physicians controlling waste is so absurd to me. The healthcare insurance industry creates waste in order to increase net profit. Read more »
*This blog post was originally published at Repairing the Healthcare System*
