Monday, March 24, 2008

The CON Con

Certificate of Need (CON) is the governmental regulatory program under which providers of health services – mainly hospitals - must obtain permission in order to undertake a capital project such as the construction of a new facility or the purchase of a major equipment item. CON programs are at the state level. The first CON law was enacted by the State of New York in 1964. The CON approach was adopted as national policy during the administration of President Richard Nixon, later to be repealed under President Ronald Reagan. It is currently effective in 26 states.

At the time CON came into being, health care was thought of as ministry, not business. There was concern that providers, motivated by competitive considerations, were duplicating each other’s facilities or services, thereby wasting scarce public resources.

Earlier this year, the Alabama Policy Institute published a report of its study of the application of CON and came to four major conclusions\;

- There is no evidence that CON reduces the cost of health care and some evidence that it increases cost.
- CON reduces choice and stifles innovation.
- CON imposes limits on whether and how existing providers serve their communities; e.g., by slowing the ability to provide facilities in growing neighborhoods.
- CON invites corruption. Providers wanting to build or to prevent others from building are tempted to illicit methods for influencing those with authority to grant or withhold permissions.

Alabama is one of the states with CON and, based on the above, the Institute recommends that its existing CON law be repealed.

It might be thought that providers would object to restrictive regulation of this sort. It turns out, however, that when attempts are made to repeal CON laws, providers are the primary opponents – one supposes because they value the protection against competition that CON regulation provides. However, they no doubt base their arguments on the supposed cost saving that CON laws were enacted to achieve.

You might call that the CON con.

Sunday, March 16, 2008

A Lesson from BIDMC SPIRIT

Paul Levy, in my mind one of the bright lights in health care management, is CEO of Beth Israel Deaconess Medical Center in Boston. He has his own blog (www.runningahospital.blogspot.com) and one of the things he talks about is an initiative at his institution that he calls BIDMC SPIRIT. BIDMC SPIRIT tries to get everyone in the hospital involved in trying to do things better and more efficiently.

In a recent posting about it, he had this to say:

“The underlying premise is that a democratic approach to problem identification and problem solving is what makes it possible for a complex organization to discover ways to improve. As Steven Spear notes, the alternative method -- trying to design the perfect complex system in advance using the traditional business hierarchical approach -- is unlikely to produce a sustainable and efficacious solution, especially in an environment characterized by structural change.”

All of the people trying to force computer and other management tools and techniques onto health care providers would do well to take note. The result in too many cases is that the provider (usually a hospital) continues to do what it always did in the inefficient way it always did it and just adds what is being urged upon it (together with its cost ).

What should be required of providers is that they show what they are doing to improve safety, enhance quality and reduce cost. How it is done should be for the providers to figure out, using methods like BIMDC SPIRIT.

Thursday, March 13, 2008

Nobody in Charge

Hospitalists are physicians who work full-time in hospitals caring for inpatients. The specialty emerged because physicians found it inefficient to divide their work between the hospital and their offices and so preferred to turn the care of their hospitalized patients over to others; i.e., hospitalists.

When the specialty first emerged, I saw it as progress. It seemed to me that having a single physician or organized group of physicians care for all the patients on a nursing unit created opportunities for efficiencies through standardization of procedures – something that would have been difficult to achieve when the unit had to cater to the practice patterns of many physicians.

However, creating an opportunity doesn’t mean that it will be taken up. Somebody has to do it and in this case it seems not yet to have happened.

Take the example of friend Bill Busby as related to me in a recent e-mail.

“I had the misfortune a couple of weeks ago to be forced to enter the hospital for pneumonia. I took along with me both of my insurance cards and a two-page rendition of all of my medical history, my current meds and my physicians' names and phone numbers. My daughter, who accompanied me, also had a copy. Despite all of this ammunition, I can't believe the number of times I was asked for these data by a hospital staff member. They spent more time with this trivia than the doctor did in diagnosis or the X-Ray tech did in taking pictures.

Finally, after 4 days, the "hospitalist" came by to say I'd be discharged the next day. The next morning, some one removed the IV rack but not the hardware in my arm. Then someone removed the drip medication apparatus but not the mounting hardware. No one did anything about the catheter. After lunch, I began to wonder if they'd forgotten me. On a white board in my room were several phone numbers and a list of nurses--charge nurse, head nurse, nurse-nurse. I started calling the numbers. The first one I reached admitted that she was responsible for getting me cleared and that she was waiting for the doctor to sign a prescription for an antibiotic. What did that have to do with getting the hardware out of me so I could dress? Oh, it had to be done in a certain order. I called another number. This one said to call another. I did and voila the necessary people showed up to remove the hardware so I could dress. Finally nurse number one showed up with the prescription. She was very angry because I had interfered with her routine.”

Wife Marilyn recently had a somewhat similar experience trying to get out of the hospital after her three-day stay for a small stroke. She spent the first night in the ER because there were no beds. But the day of her discharge they couldn’t get things together until late in the afternoon – thus tying up the bed she was in.

The modern way of fixing that would be to assign the job to a group of the people responsible for the functions involved - including the doctors - working under common leadership and supported by management. That is still pretty uncommon in hospitals.

Or to put it in more traditional terms, nobody is in charge.

Wednesday, March 12, 2008

Health Savings Accounts

Surely by now everyone who pays attention to health care issues knows about Health Savings Accounts (HSAs). But in case someone doesn’t, an HSA is an account held by a financial institution into which an individual can put tax-free money for use in paying medical bills. If the money isn’t used, it can be taken out and taxes paid on it. The holder of the HSA must also have a health insurance policy for catastrophic coverage with a high deductible.

The idea behind the HSAs is that instead of having some third party (like a government agency or an insurance company) make decisions about their health care, individuals should keep the money and do it themselves. The assumption is that if they are spending their own money, they will use services more prudently and shop around for best value. The amount of unnecessary services would be reduced and the health care system, being forced to compete for patients, would become more efficient.

Before commenting on that, let me express my own belief that the appropriate use of market forces would be the most effective way to cause health care to reform. The ability of financial pressure to overcome resistance to change – even in health care - has been amply demonstrated in the past.

Having said that, I am not yet convinced that HSAs will generate the market forces expected from them.

For one thing, there are skeptics who find it hard to imagine themselves picking providers on the basis of price. But even if people learned to do that, our society holds strongly to the view that the stress created by an illness or injury is enough by itself and that financial stress should not be added to it. That is one of the reasons for the catastrophic insurance coverage requirement that accompanies HSAs. Presumably, the balance an individual might have to pay out of pocket after exhausting the HSA and before the insurance kicks in is small enough not to cause significant financial discomfort.

But if individuals are thus protected from financial stress, how much energy will they devote to weighing the financial consequences of healthcare decisions? I suspect not much.

For another thing, it seems likely to me that an HAS holder seeking health care will first select a physician. If the individual thinks that the physician’s recommendations for diagnostic and therapeutic services are unnecessarily expensive, the matter is likely to be negotiated between the two of them, with the physician’s opinion carrying the most weight.

As a result, hospitals and other providers would continue to be economically dependent on maintaining good relationships with physicians who refer cases to them and would be very reluctant to initiate reforms that might put those relationships at risk.

That would mitigate against the system changes that are generally believed to be essential if health care is to become more efficient. At a minimum, such changes are likely to annoy the physician by disturbing his/her established way of working. A provider dependent on the physician for business will not be anxious to do that.

So while I think that we ought to be looking for effective ways to use market forces as a stimulus for health care reform, I suspect HSAs will not prove to be among them.

Thursday, March 06, 2008

Health Care Inaction

Long-time friend and frequent correspondent Bob Odean recently forwarded to me a magazine article summarizing the position of one of the presidential candidates on the subject of health care and asked whether I had been studying the various proposals being offered and planned to comment.

My answer in both cases is no. To be frank, I have not been paying much attention to what the candidates are saying on this topic. For one thing, I have learned over the years that the poll-and-focus-group-tested statements of candidates are not very reliable indicators of what they will do if elected.

But of greater relevance in this particular case, it seems to me that whatever the candidates might say, health care is not going to receive much action at the federal level in the foreseeable future. Any politically palatable proposal would involve spending money and what with the war, the deficit, and the recession, there isn’t likely to be any.

Although most of the political discussion has dealt with the issue of health insurance coverage – should it be compulsory or voluntary, etc. - I have noted comments by one or two candidates to the effect that cost is also a problem. I take that as a sign of growing realization that, by itself, extending coverage is not a solution. Massachusetts, which has been thought a national leader in this area, has just doubled the estimate of what its program will cost and there is some doubt as to whether the state will be able to afford it. California took one look at the Massachusetts experience and killed Governor Schwarzenegger’s proposal for universal coverage.

The core issue is that we have a system of delivering health care services that cannot be sustained economically. Fixing that means changing the system so that it requires less money. But one-man’s outgo is another man’s income and so if less is spent, somebody will get less and whoever that is will be unhappy. Making people unhappy is something that politicians are notably reluctant to do.

Up to now, the pain of paying has been less than the pain of doing something about it and so costs have continued to rise. Ultimately, that will reverse – in the private sector or the public sector or some combination of both. When it happens, corrective action will begin.

Sunday, March 02, 2008

My Letter to the Editor

Early last week The Boston Globe carried an Op-Ed column by Drs. Joe Dorsey and Don Berwick extolling the virtues of capitation – the system in which the health insurance company pays for the care of a subscriber by remitting a fixed and predetermined amount per month to a provider organization. Dorsey and Berwick fondly recalled their early days as practicing physicians employed by the Harvard Community Health Plan (HCHP), one of the early HMOs financed by capitation. Dorsey became Medical Director of HCHP and Berwick is a founder and renowned head of the Institute for Healthcare Improvement.

The point emphasized by the authors was that under capitation they were free as physicians to do what they believed to be best for the patient without worrying about the complexities of payment.

Those were the days of managed care, which the column referred to as having been “hijacked” by insurance companies.

That reference stimulated me to send the following letter to the editor:

“I agree with Dorsey and Berwick that capitation is the best way to pay providers of health care. However, their accusation that insurance companies "hijacked" managed healthcare is unfair. The detested interference by those companies in medical decision-making was in response to the failure of provider organizations to prevent the unnecessary use of expensive services. Or, to put it in fewer words, to the failure of providers to manage care. Like Dorsey and Berwick, I think capitation ought to be tried again. But it will succeed only if providers are able and willing to be effective managers of care.”

The Globe published my letter, along with several others relating to health care, in its Sunday, March 2 edition

Saturday, March 01, 2008

The Constraints of Culture

bev M.D. commented as follows on my recent posting titled Unmanaged Care:

“I have no knowledge of what Kaiser, Mayo or Ford do, but what leads to your supposition that they don't impose the necessary discipline either? I am asking because that would be a blow to my pet theory that a "shotgun marriage" of hospitals and large physician groups, a la Mayo, Cleveland, etc., would go a long way to ameliorate the total lack of coordination and continuity in our present system.”

Managing care means deciding the best way to deal with a certain type of case and then being disciplined enough to get everybody to do it that way.

That runs counter to the prevailing culture that proscribes interference in how individual physicians treat their individual patients. It is the culture that leads politicians to be in favor of “putting medical decisions back into the hands of doctors and patients.”

Kaiser, Mayo and Ford are not immune from that. Their doctors were trained like all other doctors and their trustees and managers reflect the culture of the society of which they are a part.

This unwillingness to tolerate interference in the doctor/patient relationship is one of the tenets of our culture that stands in the way of meaningful reform of health care. It is changing – if ever so slowly – and one hopes that organizations like Kaiser, Mayo and Ford are in the vanguard of that change.

But there is a limit to how far those organizations can get out ahead of the prevailing culture and so far there has not been enough change to allow Kaiser, Mayo, Ford or anybody else to impose the discipline needed to effectively manage care.

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