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Moral Hazards: What Happens When You Think Healthcare Is Free

By Alan Dappen, M.D.

“Doc, you’re the best! You saved my life, and my wife’s. You delivered my kids and brought them through sickness — time and again. I trust you, and can confide in you … Hey, wait a minute … Are you still a Preferred Provider?”  

This is a statement I heard all too often as a primary care doctor beholden to third-party providers. When a long-time patient asked this question, I felt like the mythological Damocles, who precariously sat beneath a sword suspended by a horse hair, for if I answered “No” to that question of “Are you a Preferred Provider” the sword would fall, swiftly.

No matter skill, knowledge, talent, caring, quality, experience, price or level of trust of their current primary care practitioner, 90-95% of patients who ask “Are you my preferred provider?” paradoxically will exit one primary care provider’s office to entrust the decisions of their day-to-day health care to another physician picked by their insurance company, even though this new doctor may be a stranger who signs a contract to do the job for less money.

For decades now patients have been led, like lemmings, by the belief that the vast majority of healthcare is virtually free because they have health insurance usually wholly and partially funded by someone else, like their employers of the government. Furthermore, patients trust that the providers of this health insurance know what is best for their care.

Because someone else is footing the bill, we as patients have absolved ourselves of the responsibilities associated with finding and consuming good care. Instead, the hope of getting what appears to be virtually free health care trumps all other considerations of care, whether it is quality, level of expertise, convenience or accessibility. Few of us are immune to wanting to get something for less, or better yet, something for nothing. This behavior leads to moral hazards, which are most easily explained by the WIFM (“What’s in it for me”) concept, and best exemplified by the way we eat at a buffet, drink at an open bar, or most recently by how the banks flocked to the sub-prime market to make easy, big money.

In health care, these moral hazards mean patients do not hold themselves accountable for finding the quality of care they desire at a price that makes sense. Instead, patients often rush for more health care believing that more care is better care; or to specialists because this means more competent care; or to more tests because this translates to more comprehensive results; and finally to more drugs and more treatments because these mean a longer, happier life. And patients do so because they believe their care is “free.”

Most patients are loathe to believe the numerous studies contradicting many of these beliefs. Due to the set up of the current “free” care healthcare system, patients are shielded from the actual costs of care, so they do not carefully consider these costs when assessing care. Take, for example, that a new chemotherapy drug for colon cancer cost $40,000, and yet only adds an average 1.5 months onto a patient’s life. Or that the newest brand name antidepressant costs 6 times more than its older, generic cousin (Prozac), with no evidence that it works any better. And finally, consider this example: a 70 year-old man with severe, irreversible chronic end-stage heart and renal failure, who has been bed-ridden for 3 months with numerous deep bed sores, and whose family demands “keep him alive no matter the cost.”

Unfortunately, the WIFM game doesn’t end with the patient.  Imagine the beauty of running a business when all your customers say, “Don’t worry, just send the bill to Mom (the employer) and Dad (the government) and they’ll pick up the tab.”  It is not rocket science to understand how this led physicians to a business model that guaranteed customers as long as they played by the providers’ rules; nor to understand how drug companies produce more and more “me too” drugs that offer no advantages over generic precursors but cost 6 times more; nor to see primary care physicians moving to specialization, with little difference in training compared to primary care while doubling or tripling fees; nor insurance companies keeping 30-40% of all collected money for “administration, policing, and profits,” and their executive team pocketing exorbitant rewards, like the United Health Care CEO who amassed almost $2 billion in just a few years.  How dare he?!

This then is the systemic toxic effects of our health care system. The moral hazard of free healthcare binds us into one big dysfunctional family. Whatever happens, let’s make sure someone else is paying for care.

Here’s the rub: insurance has a social value for protection against large or chronic, recurring costs to help ensure your financial well-being. Primary care, on the other hand, is something all of us need, on average 1-2 hours a year and a can cost the patient as little as $300. What minimal cost to pay for staying healthy today, building for a healthy tomorrow, and ideally decreasing our need for more expensive healthcare later on. Yet few are willing to pay only a little bit today for their day-to-day care – no matter its level of quality, accessibility or convenience, unless it is “free.”  So, in a world of moral hazards, what is going to happen to typical primary care?

Stay tuned and we’ll review the dirty little secrets primary care plays to survive and why it really does matter to you.

Until next time, I remain yours in primary care,

Alan Dappen, M.D.

Vote for Val?

Well, I’m a finalist in the medblog awards… but I need your votes to win. I’m pretty sure that I’m going to be crushed by Respectful Insolence – but it’d be nice to give him a run for his money. Any takers?

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My friend Kerri Morrone Sparling is also in the running for best patient blog.

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Are For-Profit Healthcare Companies Inherently Less Ethical Than Non-Profit Organizations?

I was a little surprised by a recent reader comment suggesting that pharmaceutical companies are no different than tobacco manufacturers. While I am strongly opposed to misleading pharmaceutical marketing tactics, the bottom line is that most drugs have a legitimate therapeutic value. Tobacco, on the other hand, is a known carcinogen with no medical value that I can think of. This comparison, however, brought into focus a common underlying assumption: that for-profit companies are inherently less ethical than  non-profit and academic centers.

I’d like to question the tendency to absolve academic centers of any possible wrongdoing on the basis of their educational reputation or non-profit status. Of course, financial gain is not the only motivator behind endeavors, initiatives, and behaviors – though it may be the easiest to measure.

As a medical student I witnessed a sad example of academic misbehavior. Senior residents in the department of plastic surgery were performing liposuction procedures after hours for cash. When a patient experienced an infectious complication from a thigh liposuction procedure, an investigation ensued. The residents claimed to be putting the cash into the residency fund, to be used to support travel, lodging and participation in annual assemblies – therefore exonerating themselves of wrong-doing.

It is unclear if the department chair was fully aware of what the residents were up to, though he was reprimanded, terminated, and ended up teaching at another institution. The plastic surgery department lost its accreditation, and all of the residents had to finish their training elsewhere. As for me, I lost my mentor (the department chair) and ended up not pursuing a career in surgery. There certainly was a lot of fall out from that debacle on all sides.

A case of academic double standards was highlighted recently by Dr. George Lundberg in a Medscape editorial where journal editors claimed that continuing medical education (CME) courses should never be sponsored by for-profit companies. Meanwhile the journal accepted advertising from these same companies:

…The JAMA editors who wrote in 2008: “…providers of continuing medical education courses should not condone or tolerate for-profit companies…providing funding or sponsorship for medical education programs….” This is from a publication that, for more than 100 years, has been supported primarily by advertising revenue, mostly pharmaceutical. The editors will say “yes, but we follow rules to prevent bias or improper influence.” True. So do we, a for-profit company, follow rules that prevent bias and improper influence.

On the positive side, there are many examples of for-profit companies who cultivate a culture of environmental responsibility and charity – Ben & Jerry’s, SC Johnson, and Patagonia come to mind. And let’s not forget the foundations created by Bill and Melinda Gates, Warren Buffet and many others thanks to overflow from for-profit endeavors.

In the end, conflicts of interest, hidden agendas, and secret quid pro quos are a matter of individual character and corporate culture. The people who build a company (or a country) have more to do with its behaviors and processes than the simple label “for profit” or “non profit” or any assumptions made at such a superficial level.

We are all biased in many ways, both consciously and unconsciously. The best we can do is to strive for transparency. It may be best to judge each entity and/or individual by their degree of transparency rather than profit status, academic status, or subject matter expertise. For-profit companies can be highly ethical, and academic centers can be rife with undisclosed conflicts and questionable behaviors.

Healthcare organizations should not avoid or incur scrutiny based on their profit status alone. Bias comes in many forms – and the best we can do is work for the good of others in full knowledge of the influences around us.

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