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Large Hospital Systems Are Driving Up Healthcare Costs

The primary stakeholders in the healthcare system are patients and physicians. Without patients or physicians there would not be a healthcare system.

Patients should be the drivers of the healthcare system. They are not. The primary drivers are the government and the healthcare insurance companies.

Hospital systems play the next largest role in driving up the costs of the healthcare system. Large hospital systems are constantly playing a game of chicken with the government and the healthcare care insurance industry.

Somehow, large hospital systems have been able to stay under the radar.  They have been able to avoid the responsibility of the rising costs of healthcare.

Large hospital systems and large hospital chains know that insurers need them to service their network of patients.  The healthcare insurance companies know that the hospital systems can hold them hostage to increased reimbursement.

When a large hospital system demands an increase in reimbursement the healthcare insurance industry simply increases premiums.

An example is the Read more »

*This blog post was originally published at Repairing the Healthcare System*

Will A Market Driven Healthcare System Be Most Effective?

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*

Stick To One ER, Avoid Unnecessary Tests

Via Kaiser Health News:

On a recent Friday night at the Boston Children’s Hospital ER, Dr. Fabienne Bourgeois was having difficulty treating a 17-year-old boy with a heart problem. The teen had transferred in  from another hospital, where he had already had an initial work-up — including a chest X-ray and an EKG to check the heart’s electrical activity. But by the time he reached pediatrician Bourgeois, she had no access to those records so she gave him another EKG and chest X-ray. He was on multiple medications, and gave her a list of them. But his list differed from the one his mother gave doctors, neither of which matched the list his previous hospital had sent along.

This is excellent advice. Every ED has seen a patient, probably today, with “they saw me at the ER across town, but they didn’t do anything and I’m still sick.” While it makes some sense not to return to a restaurant that gave you a meal that wasn’t to your tastes, medicine is quite different.

If a patient gives me this history, I now have a blank slate, and need to essentially start at zero with them. So, I will do the correct workup to exclude the life threats based on the history and physical exam, which may be exactly the tests they had yesterday. I’m not going to assume they did the same tests, or that they were normal. It’s the standard of care at this time, and I have very, very few alternatives. Read more »

*This blog post was originally published at GruntDoc*

Accountable Care Organizations: Additional Barriers To Success

Accountable Care Organization(ACOs) are not going to decrease the waste in the healthcare system. Waste occurs because of:

1. Excessive administrative service expenses by the healthcare insurance industry which provides administrative services for private insurance and Medicare and Medicaid. A committee is writing the final regulations covering Medical Loss ratios for President Obama’s healthcare reform act. The preliminary regulations are far from curative

2. A lack of patient responsibility in preventing the onset of chronic disease. The obesity epidemic is an example.

3. A lack of patient education in preventing the onset of complications of chronic diseases. Effective systems of chronic disease self- management must be developed.

4. The use of defensive medicine resulting in overtesting. Defensive medicine can be reduced by effective malpractice reform.

A system of incentives for patients and physicians must be developed to solve these causes of waste. A system of payments must also be developed to marginalize the excessive waste by the healthcare insurance industry. Patients must have control of their own healthcare dollars.

By developing ACOs, President Obama is increasing the complexity of the healthcare system. It will result in commoditizing medical care, provide incentives for rationing medical care, decrease access to care, and opening up avenues for future abuse.

The list of barriers to ACOs’ success is long and difficult to follow. Read more »

*This blog post was originally published at Repairing the Healthcare System*

Cleveland Clinic Targets The “Heart” Of Chicago

All I can say is, best of luck. From the Chicago Tribune:

In a move likely to shake up the market for heart care in the Chicago area, the well-known Cleveland Clinic’s cardiac surgery program said Thursday that it has signed an affiliation agreement with Central DuPage Hospital in the western Chicago suburbs.

The internationally known Cleveland Clinic draws patients from more than 85 countries around the world for everything from open-heart surgery and valve replacement to heart transplants. Its deal with Central DuPage, in Winfield, is designed to enhance the heart care provided at the 313-bed community hospital and potentially bring Cleveland Clinic patient referrals at a time heart surgeries are less needed than they were a decade ago.

This won’t shake up the market in Chicago. After all, when you have a bunch of Cadillacs in the garage, why go after a Ford? Unless, of course, it costs a whole lot less to buy a Ford.

-WesMusings of a cardiologist and cardiac electrophysiologist.

*This blog post was originally published at Dr. Wes*

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