Insurance, cash, and moral hazard
I was speaking at a conference, and someone raised a question from the audience. “Health care reform seems to be driven from the top down. What can you say about driving change from the bottom up? Specifically, why not have people buy things with their own money, and give them an incentive to bargain with providers instead of just accepting prices set by insurance companies?” I said I believed in giving consumers incentives to shop wisely, like reference pricing and coinsurance rather than copays. “But I don’t think any of us want to give up our own insurance as a practical matter,” I said.
This gentleman came up afterwards, and followed up. He was serious about this. “You dodged the question, by saying no one wants to give up his own insurance. If we just had people shopping for their own health care services instead of through insurance, the prices would come down a lot. Look at Lasik eye surgery. Even poor people could buy some things for cash once prices became competitive again.”
I told him that I was actually for people spending their own money more than they do right now, that moral hazard (the lack of price sensitivity when others pay for a service you receive) is real and should be mitigated as much as we can without bankrupting people. But I doubted that a purely cash economy in health care would work.
It dawned on me after that conversation that what he was opposed to was insurance itself. Interestingly he advocated catastrophic insurance for everyone, including the poor, and was for having government pay for the poor’s coverage. Where we differed, I think, was where to draw the lines. How poor do you need to be to get government subsidies for your insurance? What constitutes “catastrophic” thresholds for insurance to kick in? Should policy limits be different for rich people vs. middle class, given that it takes a lot less for the latter to spend down resources?
I actually think that he is in theory correct. Much of the lack of selectivity we have in choosing medical interventions is that the cost of them to us personally is often very close to zero at the point of purchase. The differences between treatment options is also often literally zero; one drug and another cost us the same at the pharmacy, even though the list price of one can be half that of another. Indeed, in this setting, we often maximize our perceived value by getting the most expensive option, since we perceive we are getting more for our money, or more accurately, more for someone else’s money. When paying zero or $10, who wouldn’t want to get $100 of drugs vs. $50 of drugs? Surely there’s something about the $100 drug that justifies its cost to the insurer, and therefore is getting us more value for our same copay?
Whether you subscribe to the libertarian view or not, though, the tricky part is where you draw the lines. Notice that he wasn’t for doing away with insurance altogether, just doing away with insurance for things you could afford to buy yourself. He still accepted the thought of catastrophic insurance, in which moral hazard would still obliterate any price sensitivity.
This line of thought is influencing plan design and cost containment efforts more and more. Philosophically it is appealing because it is in line with the values of individual choice and individual responsibility (both very American).
Nonetheless, it is a hard sell because we process risk emotionally, not intellectually. For example, psychological studies show that we fear loss to a much greater degree than we desire gain. Therefore, things (like insurance) that mitigate risk are valuable to us, perhaps beyond rationality. “De-insurancing”, therefore, goes against our primitive brain, and is likely to be resisted viscerally by most, despite its intellectual appeal.
Portrait of American Health Care
There are several articles to commend in the November 13th issue of JAMA, a special issue devoted to “Critical Issues in US Health Care”. But perhaps the most important one, by Moses et al, is a wonderfully detailed snapshot of the American health care system over the past three decades, and how it has evolved over that time. Some interesting observations:
- We all know that health care inflation has exceeded general inflation over that time. But there are a few ways that can happen: we can use more stuff per person, we can have older people who on average therefore need more care as they age, or we can raise prices for the same services. Which one is the biggest factor? The surprising answer is that the increases have come mostly from increased prices, and not increased intensity of service or older average population. So if that’s where the increase has come from, perhaps our prices have been allowed to rise through us not knowing how much medical stuff costs?
- Is insurance paying more or less of the bill now than in 1980? Despite the general impression that purchasers are pushing more of the bill onto individuals, the answer is that out of pocket spending for health care is declining as a percentage of the total bill. Most of the compensatory increase has been picked up by government in the form of increased Medicare and Medicaid spending. So we shouldn’t conclude that we aren’t spending more on health care as individuals. We are. We’re just spending an unfathomable amount more as governments and employers, more money than most nations’ GDP.
- True or false: most of the money we spend on health care is for the care of the elderly? False. 80% of total national HC expenditure is on individuals younger than 65. As with those over 65, most of that money is spent on chronic disease care. So the thought that simply reforming Medicare will get us back to sanity is wrong.
The article goes on to identify three big factors that the authors think produced these results: industry consolidation, information technology, and consumerism. (At CIVHC we talk about the three tsunamis: debt, information, and the empowered consumer. More on that later.) The sectors that are consolidating fastest are insurers, pharmacy benefit managers, and physician groups. The consolidation of these sectors as well as with others like hospitals, affords the resulting organizations the market leverage to raise prices.
IT, including the installation of EHRs and the infancy of the use of Big Data, is beginning to reduce the fragmentation that is the hallmark of American health care inefficiency. But we are in a phase in which that massive investment, public and private, has added to cost, but the returns from reduced fragmentation are just beginning to accrue.
Finally, after a long tradition of paternalistic relationships in medicine, consumers are demanding that the industry begin to produce products they want to buy, not simply what the industry thinks is best for them. But as anyone who has used the system lately knows, health care has a long way to go be as customer centric as the average online retailer who remembers what you’ve bought before and offers you similar items when you return to the site.
I speak on these topics often, and it strikes me that the changes we are watching are not simply roiling health care, but the structure of American society. The same factors that are driving change in health care are changing other industries, and challenging them to make a better product or experience, with more stuff at lower cost and delivered exactly as we need and want it. As I type this, I am listening to Pandora, where I’ve customized the station to my musical tastes. I did that for the cost of having to listen to an ad every half hour or so. Now why did I buy albums in the past? I can’t remember.
The first shift is from a society in which people assumed that everything could be bought on credit, and that debt could be accumulated indefinitely without consequences. While this is still hotly debated among economists, it doesn’t make sense to the average person that you can get something for nothing; eventually, you have to pay your debts, or someone else does. In health care, the someone else is the next two generations, on whom we’ve loaded several trillion dollars’ worth of debt, much of which was incurred for that increased Medicare and Medicaid spending we mentioned previously. The mental shift from thinking that the Internet driven stock market would pay for a multitude of sins, to the horrible realization that we might have to pay up ourselves, is sobering indeed.
The second shift is the explosion of information technology. We aren’t using it well or effectively for the most part yet, but we’ll get the hang of it, and when we do, we’ll use it individually and collectively to drive services to value, the way it works in other industries. There are a bunch of interesting experiments out there currently, including Centers of Excellence networks, mobile apps that identify value providers for those paying their own bills (like people with high deductibles, which will eventually be most of us), reference pricing, and the emergence of all-inclusive bundles for elective services. Two factors kept us from shopping for medical services the way we shop for cars and dishwashers: first, almost no one cares about price when spending other people’s money (think expense accounts), and second, if your customers don’t care about the money, then who bothers to put out a price list? But benefit designs that make patients into consumers again, e.g., reference pricing, will awaken all of our inner shoppers, and when that happens often enough, the price list will become de rigeur among providers. Why will we go to all this trouble? See the section on debt above. Remember, it’s looking grimly like we’ll have to settle our own bills, within our own lifetimes.
The final shift happens when you get people spending their own money and information technology gives them Ebay pricing and rankings for providers. There are large employers who are already doing this for their employees, and part of the appeal for private exchanges will be these kinds of shopping tools.
There will still be problems, no doubt. Emergency care is still a problem, in that when you fear dying, you’re not very price-sensitive. In that circumstance, “trust me” from an ED doc sounds like a mandate, not an offer to purchase. But I think the era of blind purchasing in health care is over. And that will make the kind of article Moses et al produced all the more interesting when we look at our current decade in retrospect.
Why medicine is changing
I just submitted this piece for the Colorado Medical Society magazine:
Dear Colorado Physician,
Hi. It’s Jay, the guy from down the hall. I am writing to you today to talk to you about how our world is changing, and why I think it is doing so.
First, none of this is going to make any sense until we face up to the fact that what we have viewed as “the normal course of business” in medicine is anything but normal. In the history of the world, never have so many spent so much of other people’s money with so little accountability for how it was spent. Never. It’s been the biggest bonanza of unsupervised money in the history of the planet. You and I, hospitals, drug companies, insurance companies, and many others have made incredible livings based on this lack of adult supervision of our spending patterns. While we like to excuse ourselves from that list, as Walt Kelly said in Pogo, “We have met the enemy, and they is us.” At least, partly us.
How did this happen? Well, remember that in 1950, the sum total of the data about our practice patterns could fit into a cocktail party conversation. With loud music on. In the absence of the ability to judge who was doing better and who was doing worse at our gig, society did a number of things to try to help itself sleep at night.
First, they invented the malpractice suit. By more or less randomly punishing anecdotally bad behavior, they sent the message, “We can’t tell if you’re doing a good job, but we’ll rely on your fear and guilt to regulate your behavior. Sorry to resort to that, but it’s the best we can do right now.” We learned to fear and loath trial attorneys.
To try to regulate our spending, the spending with no natural brake on it, they invented prospective review in insurance companies. This was to send the message, “We can’t tell if you’re doing a good job, but we’ll rely on you giving in to hassle factor for things you don’t really want all that much, to distinguish what’s medically necessary from what’s not. Sorry to resort to that, but it’s the best we can do right now.” We learned to fear and loath insurance companies.
To try to regulate our quality, the quality no one could define with any specificity, they created hospital peer review and credentialing. Good, we thought, because we control those, and so while we do punish egregious error, for the most part we go through the motions and excuse anything we can imagine having done ourselves on a bad day. We do no root cause analysis, no systems improvement, and we wait for the same thing to happen again. We shake our heads when it does, and wonder why so many of our peers are having bad days.
But in 2013, we are learning to tell who does a good job.
In 1965, Gordon Moore working at Fairchild Semiconductor, observed that the number of transistors on a chip was doubling every 18 months, and the cost was halving at the same time. This meant that computing power, and therefore information, was getting cheaper at an exponential rate. Today in 2013, Moore’s Law is still true, and information is cheaper than zero.
The cheapness of information fundamentally changes the properties of modern society. It means that everybody’s performance can be measured, including yours, with increasing precision and accuracy. It means data will be increasingly available to do systems analysis, and improve the safety, reliability, and efficacy of treatments and procedures. It means that very complicated things will be modeled predictively, including things that are way more complicated than a hip replacement. So the chances this computing power isn’t being applied to your performance as a doc? Zero. All the major health plans have already invested a lot of money to do exactly that.
So we have a couple of options here. We could try to ignore this trend, and hope everyone who pays for our stuff will, too. We can spend our time and effort trying to discredit the data that’s being used, even though similar techniques are being used to send coupons to women who are pregnant before they’ve told anyone, through their buying patterns. Big Data is here, and it cannot be lobbied or wished away.
Or, we can use the information that health plans and others can provide to get better, and to accelerate our quest for error-free, high value care. We can humbly accept that the smartest doc alone has no chance to do her best work without the data and analysis enabled by Moore’s Law. And we can begin to use these data to get better at what we do at a rate unimaginable in the days before powerful computing.
I’m not here to make that choice for you, even if that were possible. I’m here to tell you that whether you voted for this or not, it’s where we are. The profession will never be the same, and like all loss, that is sad. But we should recognize that the old system and its imperfect quid pro quo were driven by society’s inability to judge what it was buying from us; its need to feel safe through fear and guilt-based mechanisms; and comforting delusions about our infallibility that we secretly wanted to believe ourselves. Today in 2013, I am confident that none of those things produced what is best for us, our patients, and our society at large.
What will you choose? You won’t have to tell anyone. They’ll know from the data.
The kitchen table conversation about what we can afford
An elderly couple I know had a division of labor at their house many years ago: Ed was responsible for financial planning, saving for retirement, etc. Marge was responsible for day-to-day bill paying. One day, when times were tough and the bank account thin, they received a notice that they were overdrawn.
“How did this happen?” Ed asked Marge.
“Well, it could be those checks I wrote to charity,” Marge said sheepishly.
“But did you check to see if we had money in the account?” Ed asked.
“No, I assumed we did—because we still had checks,” she replied. “Ed, you should have seen those people—they needed coats, and groceries.”
The reason I bring this up is that I think our country’s finances currently work a lot like this. We continue to write checks, because there are checks left in the checkbook, not because there are sufficient funds to pay them.
And, we are doing it for the best of reasons: because we are trying to assure our neighbors get things we feel are human rights, namely health care for the elderly, the disabled, and the poor. We are scrimping on repainting the house, fixing the water heater, and funding the kids’ college accounts, all to write checks for more health care. It is borne out of compassion, and many of us feel pretty noble about that. We’re not going into debt for ourselves, but for the benefit of the sick and the needy.
But compassion or not, there is a day of reckoning when we realize that we can’t continue to spend what we don’t have and aren’t likely to earn in the future. Many of us think that day is today. Or maybe yesterday. In any event, with the debt we’ve incurred, the interest payments alone would be enough to worry Ed and Marge that they’d never catch up. They’d know that they just didn’t have that many raises left in their working lives.
The sequester, taking effect at midnight absent a miracle, is an attempt to deal with something like Ed and Marge’s predicament. While we as a nation made pledges to charity (and bought a big house) based on the thought that we would have ever increasing incomes, the reality is not so rosy in a tough world economy. Generous people that we Americans are, we’ve taken no raises in the aggregate for ourselves in this last decade; all of our raises have gone to paying interest on our past generosity and increasing that generosity through more health care spending. The president’s Council of Economic Advisers projects that on our current trajectory, that trend will continue through at least 2040. As a result, our standard of living has stagnated and will continue to do so in the next quarter century.
Ironically, the sequester makes cuts to almost everything but the main thing that is putting us deeper in debt: Medicare and Medicaid. If we are ever to stabilize our debt, we’re going to have sit down at the kitchen table, and figure out what proportion of our income will go to health care to reflect the compassion we feel for our neighbors. But what’s left must still allow us to fix the water heater, paint the house, and start putting money into the college fund again. We can figure out that number, just like Ed and Marge did.
Bowles-Simpson is no match for the sequester
Erskine Bowles and Alan Simpson announced this week another proposal to right the budget over the next decade, proposing both spending cuts and revenue increases. There are many striking things about it, but one of them is that it actually demands cuts to Medicare. As it is, the sequester will cut domestic programs, but leave Medicare and Social Security untouched.
And so while it is not being framed this way, what we are watching is de facto a question of how much we are willing to give up now in order to preserve the illusion that Medicare is an unlimited entitlement, for another year or two. In Bowles-Simpson, discipline is imposed, provider fees are cut, higher efficiency is demanded. None of this would be popular with doctors, hospitals, or other providers in the industry, and their lobbies I’m sure would work hard to defeat this proposal, should we ever give it serious consideration. In the sequester, we cut virtually everything else, but Medicare in all its inefficient, fee-for-serviceness remains a happily overgrazing sacred cow.
The process of making that choice would be hard enough in a calm, rational environment. In that hypothetical world, we’d understand the consequences of each choice, we’d listen to those who would be affected thoughtfully, and we’d make tradeoffs and compromises so that every constituency would be mildly unsettled but not threatened with nonexistence.
But we don’t live in a calm, rational environment. We live in a world where poorly informed votes are prized (since they count the same as well-informed ones), emotion sells air time, rationality is often defeated by fear, and the short-term arbitrage almost always trumps long-term investment. In this environment, my sad suspicion is that the fear of a catastrophic future loses to the prospect of a painful present most of the time. Through our continued inability to address Medicare decisively, we are increasing the odds of both, year by year.
Warren Buffett, ketchup, airlines, and health care consolidation
Berkshire Hathaway is acquiring Heinz. US Air is merging with American Airlines. Anthem is hiring a hospital system veteran to become its next CEO. What do the first two have to do with the last? How are mergers and acquisitions in other industries related to those in health care?
What the press is saying is that the first two acquisitions have come now because some stability has been restored to the markets, and people feel freer to put capital on the sidelines to work. Throughout the Great Recession, companies have been stockpiling cash because it increased their flexibility and therefore survivability in an uncertain environment. The public did the same, paying down debt, holding cash, getting out of stocks and bonds and into safer investments like money markets. Now, with volatility down, some sense that Europe will not go to hell in a handcart in the short run, companies are buying future capacity.
But why do companies merge in the first place? There are good reasons not to: the clash of cultures in the airline mergers is legendary, and some mergers fail because of that. Companies merge because they cannot compete at the level at which they are currently organized. American Airlines is a good case in point, where even at their size, they are still in receivership in the tough competitive environment that is the airline industry. They needed economies of scale, and synergies in their route structure to hit the price points of their competitors.
The airline merger is an example of horizontal integration, the merger of companies in the same business. But increasingly in health care, we are watching vertical integration, the merger of companies in related businesses, but who do not do exactly the same thing. Hospitals are acquiring physician practices at an increasing rate. They are also entering related businesses. There was a recent announcement here in Denver that the University Hospital system is contemplating building its own health plan. Rumor is other systems are thinking the same thing. Now running hospitals is hard enough, as anyone who has tried can tell you. Why would they want to acquire practices and health plans?
I think it’s because of the same reasons other companies in other industries do: because they can’t compete at the level of their current organization. If your competitor has an integrated enterprise of hospitals, docs, and health plan functions, you might need the same in order to compete in the marketplace, say, a health benefit exchange.
This brings me back the beginning of this post, and Joe Swedish taking the wheel at Anthem. Mr. Swedish is a long-time hospital executive; but Anthem may have recognized that its future disproportionately depends on the integration and efficiency of its provider networks. And Joe Swedish knows all about those.
Now that everyone is feeling safer, the cash that has been stockpiled in health care companies will likely be mobilized in the same way it is in other industries. I will be watching for more integration of assets, both vertically and horizontally.
Upton Sinclair, Elinor Ostrom, and the end of the illusion
Why do we think we can continue to increase what we spend on health care forever? And if we cannot, how will we ever develop the discipline to control costs? A friend of mine asked this in an email conversation several months ago. Here was my answer:
What I think we are watching is the end of an illusion, so well maintained, that there are no limits in time, money, or resources that we can devote to the pursuit of the medically-based fix. We have created and maintained this illusion so very well that we have two generations of medical professionals who claim as birthright this illusion and defend it with passion and fervor. We medical professionals make outstanding incomes from this illusion, and so in the words of Upton Sinclair, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.” And nonetheless, we are out of money in this richest of all societies to continue to believe what isn’t true.
The mechanisms by which we have preserved this illusion are instructive. The third party payer system allows us to feel emotionally that the cost of an intervention is just the copay or deductible, even though intellectually we know that to be untrue. The separation of payment of premiums and delivery of services uncouples them emotionally, and so we don’t feel them as causal. Indeed, if you have employer based insurance, you don’t even see about 70% of the cost as a payroll deduction, as it’s coming out of your company’s profitability. In essence, we don’t notice the true cost of medical stuff because we are using pooled dollars, metaphorically grazing our sheep on the village green, in our time of need. Haven’t we done that for others in their time of need, and so aren’t we entitled to the same? Of course we are, we think, and the “best” (read: most expensive) intervention possible because of a vague and fervent hope that the additional dollars buy some benefit that we can neither directly sense nor articulate.
The grand challenge of payment reform is to restore some sense of limits to those who allocate finite resources that are fungible into medical interventions. In essence, we are trying to undo the spending behaviors that have arisen from the lack of accountability that insurance offers us. While neither I nor anyone I know would want to do without the peace of mind that insurance offers, it also creates moral hazard, the decreased sensitivity to the true costs of goods that comes with not paying the tab out of pocket and at the time of service.
I do some work in payment reform around the country, and I am starting to note a trend: those places with the least are often the first to understand this, and are beginning to behave in ways that reflect health care as a limited and shared community asset. They are doing it before communities and regions that have more wealth, and therefore the luxury of preserving the aforementioned illusion. The late Elinor Ostrom’s theory of common pool resource management, for which she won the 2009 Nobel Prize in Economics, is a reasonable first approximation of those mechanisms and structures that create sustainable use of shared resources: http://en.wikipedia.org/wiki/Common-pool_resource. While its pretty dense, and requires an economist to explain it to us all, it does outline those things that successful communities build to prevent the depletion of stuff all might need at some time but can’t have simultaneously.
So in the best of worlds, when a shiny new medical intervention appears in your community, someone in your community would evaluate this intervention, its cost, and the health it creates, against the aggregated resources your community has to spend on health in general. They would understand that spending on that intervention necessarily means other interventions would likely not be funded, and it would have to stand up to that test of value. As all of us know, this evaluating someone doesn’t exist in American communities, and we have a primal cultural dread of that someone that goes back to the reason many of our ancestors migrated here. Despite this, as I like to say, being out of money has an amazing clarifying effect on people’s thinking, and we are figuring it out with a speed inversely proportional to the amount of disposable income we have to spend on preserving the illusion.
Thus, as usual, Don Berwick is right: cost is the quality dimension of our time, as continuing to delude ourselves increases the odds that some in our society will receive nothing, as we decide that the way to make sure there is enough in the common pool is to exclude some of us, to make the pool of recipients smaller, to decide that really we were only meant to share with those who look, think, and behave like us. And therein lies the great moral dilemma of our time: who are we talking about when we use the term “we”?
Who indeed.
Congratulations to Jane Brock and CFMC
Today in JAMA is an article about transitions of care, and reducing readmissions. Dr. jane Brock and others demonstrated that with the mobilization of community resources, readmissions decline twice as fast as the background rate: http://jama.jamanetwork.com/article.aspx?articleid=1558278#qundefined
Jane and I met during this trial, and have been friends ever since. I chaired the steering committee for Northwest Denver, one of the 14 communities Jane studied. The stories were remarkable. Hospitals that are ostensible competitors came together with lots of community agencies to design uniform protocols and tools to make transitions of care more effective, efficient, and safe. Jane tells stories about another part of Denver that was the alpha test site. The hospital and nursing home staffs in that project had never met each other prior, even though they had shared hundreds of patients. When they realized how poor and dangerous their communication had been, people teared up, and apologized to one another. “I had no idea what I was doing to you. I am so sorry.”
There is much road to travel before we have safe, reliable, and effective transitions for everyone moving from one site of care to another. But Jane’s effort began and continues the right way. It recognized that the experience of care should be continuous, not segmented; that people visit caregivers, but they live in communities; and that few things are as powerful as knowing the people you work with in the common service of your neighbors. My deepest appreciation goes out to Jane and her team for their vision and hard work to tell the rest of us how much better care can be.
Individual effort, underlying infrastructure, and producing better health
I just retweeted a David Brooks article from a friend that explored a more nuanced view of one of the political axes along which we are arrayed in this country: the role of government and community vs. the role of individual effort and drive in American success: http://www.nytimes.com/2012/08/31/opinion/party-of-strivers.html?smid=tw-share&_r=0 At the one extreme are those who believe that there are no individual successes, that we are so intertwined in this complex era that bootstrapping is an artifact of the nineteenth century. What matters now is, well, luck, being in the right place at the right time to take advantage of an opportunity amidst the chaos. It is therefore government’s responsibility to make sure that those opportunities are justly distributed, and that their polar opposites, random catastrophes, are not disproportionately visited on those disadvantaged by birth and circumstance.
At the other extreme are those who believe that America’s success is the amalgamation of only individual successes, and that pretty much any aggregation of power is an attempt by those with lesser talents to overwhelm those with greater talents, and in fact appropriate the fruits of those greater talents. Luck exists, but is largely irrelevant for the talented because they can overcome any obstacle. They make their own luck. Random catastrophe is simply the outward manifestation of an individual’s inability to cope successfully, and not the responsibility of your neighbor. You may hope for your neighbor’s charity, but you may not feel entitled to it.
Who is right?
I am always suspicious of these kinds of black and white arguments, because I view them as a desire for simple theories to explain a complex world. It is understandable that we seek those in the age of information overload. Somebody somewhere has probably studied this, but my guess is that we are exposed to a couple of orders of magnitude more information daily than people a hundred years ago. Whether we want to or not, because we process emotionally, we have a feeling about everything that crosses our field of view. So the search for easy ways to categorize those things as friend or foe quickly gives rise to snap judgment, emotional processing on the fly, and gets codified as prejudgment. Why? Because when you are flooded with information, it’s all you have time for. Prejudging saves time. You are obligated by survival instinct to evaluate events and information to make sure they don’t cause your demise, and that’s done in areas of the brain completely below the level of rational thought. Ironically, I am afraid abundant information has made us less rational on average, not more.
Instead Brooks’ article lays out a more nuanced view of productive American society, one where infrastructure and community enable individual success. Both the infrastructure, which includes government and community resources, and the individual’s talent, effort, and perseverance are necessary but not sufficient. Infrastructure cannot compensate for lack of talent and effort, and we should not attempt that substitution. Talent and effort cannot replace adequate infrastructure, and neither should we rely on those things as the sole driving force for a healthy society. Without convenient prejudgment, every success is the product of the synergy between the two.
I agree with David Brooks. I would imagine his article in August 2012 was decried by lots of people. Some I’m sure dissented because it did not celebrate the individual as the only true American hero. Others dissented because it did not give communities enough credit, or responsibility. I choose to believe with David Brooks that the truth isn’t simple, and that in matters as important as our public life, we should spend some time and thought to find the answers that are harder to explain in thirty seconds.
By now I hope it is obvious why this is appearing in a health care blog. Random catastrophes are legion in health care, but so are the successes related to individual effort and perseverance. Good health is the product of many factors, some related to our efforts and some related to our circumstances. Marc Lalonde, a Canadian Minister of Health in the 1970s had a lot to say about that. He estimated that about 40% of health outcomes are related to behaviors, about half related to genes and environment, and only about 10% of health outcomes related to our attempts to fix the effects of the other factors on our bodies and minds (this last factor is of course health care, and we spend $2.7 trillion annually on it). The policies we adopt as a nation and in our communities can be ineffective if we fail to recognize the portions of our health that are related to individual responsibility, as well as those related to our underlying circumstances, in more or less equal proportion.
Watching Culture Change
I do a fair amount of work in payment and delivery system reform, in various communities around the country. I have been speaking to physicians about change coming for over a decade. If you have done any of this work, you may have had this common experience: that change is hard, and people have to have a really good reason to change the status quo. I admit it sometimes seemed to me that change would never come.
But lately I have noticed some of the conversations are different. I have been in a couple of meetings recently where audience physicians were answering the doubts and objections of other audience physicians.
“Aren’t all these quality measures arbitrary, and unhelpful in real patient care?” one might pose.
“No, in my organization, knowing our real performance has helped us improve things for patients. We’re thankful for this information, and we’re proud of doing better,” another would answer.
“Isn’t this just a race to the lowest price? Isn’t this just a way to penalize me for investing more in the care I give?”
“No, in fact quality and value rankings have helped weed out the bad performers in my procedure. The guys looking to make a quick buck are gone, and should be gone. And, my designation as a center of excellence has brought me new business.”
Say what? Where did this second group of docs come from?
I’m not sure of the answer, but here are some guesses:
- From integrated delivery systems. Many of the docs in this new category come from places that have been able to generate their own internal quality and value reports. Because these systems often have advanced IT shops and analytics, they are able to generate useful information based on both financial and clinical data. This definitely is an advantage in the era of Big Data, and is one reason why we have seen and will see more provider consolidation.
- From specialties that are competing for business nationally. If your particular niche is a rare and expensive one, you’ve already experienced something many of your peers have not—buyers shopping actively and aggressively for value, holding up your services to the light. They don’t come to you because you’re down the street, or even in the same state. They come to you because you are able to offer something predictable, affordable, and professionally excellent. And what buyers are shopping for is expanding. They are looking at more services and conditions every day, and shopping for them regionally and nationally.
- From those who have grieved the loss of unaccountability, and moved on. If no one can measure whether you’re doing a better or worse job than the next person, it’s hard to penalize anyone for bad performance. (It’s also hard to reward anyone for good performance.) This is a real loss for us docs, as we took the lack of shopping by buyers as a tacit endorsement of our judgment and competence. But truthfully, it probably represented as much an inability to judge quality by any meaningful criteria. That’s hard to swallow, but those who are succeeding in quality-driven markets have gotten over that loss.
This second group of docs is by no means a majority. But a decade ago, they were almost nonexistent. I think we are following the typical innovation diffusion curve: experimenters, followed by early majority, followed by late majority. I think what I have been seeing recently is the move from experimenters to early majority. And that, as those familiar with that S-shaped curve know, is the steepest part of the curve. Here’s hoping.
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