Where the fat is in the healthcare diet…

With all of the talk recently about the modifications to the ACA, and the implications to healthcare of the AHCA it is amazing that nobody ever talks about the administrative cost of healthcare. As an individual who has been in the healthcare environment for 30 years I can tell you that we are neglecting an area that is significantly contributing to the overall cost and inefficiency of the US healthcare system. Throughout my time as a registered nurse, and then as a physician and surgeon,  I have heard repeatedly admonitions about delivering a more, “cost effective care”, “evidence-based care”, and “value-based healthcare”.

Unfortunately, I have not seen much made of the massive administrative costs of healthcare in any admonitions towards a better healthcare delivery system. Administrative costs in the United States consumed an estimated $156 billion and 2007, it is projected to reach $315 billion by 2018. Admittedly these activities are complex. Activities such as processing claims, credentialing providers, and verifying insurance coverage are necessary but not complex.  In many cases they are automated.

However, some studies estimate that is much as $200 billion per year are spent in an inefficient administrative healthcare system. I for one can tell you dealing firsthand with large insurers that it is a healthcare system designed to frustrate, delay, and stall payments. If that’s what it was designed to do, it is amazing. At some level however, I don’t believe that it should be designed to do this. It should be an effective way to be able to administrate the healthcare system. Unfortunately, the system is grown out of control and is now adding further weight to the already massive budgetary burden of healthcare.

A recent Harvard Business Review article (below) looked at the numbers in healthcare employment and found a startling fact. From 1990 to 2012 the US healthcare workforce grew by 75%,  the ratio of doctors to healthcare workers is 1:16. For every 16 workers, only six are involved for caring for patients. The other 10 have purely administrative roles. Think about this, carefully! We have more people administrating healthcare (10) then we do taking care of patients (6). Why is nobody talking about this?  Imagine a company like GM making a car with 6 people and another 10 sitting in the office.

If you need any more evidence that the administrative cost of healthcare is getting out of hand and costing us too much you need to look no further than where the jobs are. Individuals who are not taking care of patients, who are not making medical decisions, who are not making a difference to people’s lives are now outnumbering the number of people who do.

 

 

Additional Reading:

http://www.healthline.com/health-news/policy-ten-administrators-for-every-one-us-doctor-092813

https://www.nap.edu/read/12750/chapter/7

Healthcare risk aversion….

With all of the information coming out of the last several days regarding the Senate health care bill and revisions to the AHCA a little talked about insurance change is going to have a big impact on many people.

On Thursday the CEO of Humana, Bruce Broussard stated, “No matter what they do in Washington, we are not going back in,” referring to the individual insurance market. Earlier before there was ever talk of the House and Senate changes to the ACA Humana had announced it would be exiting the Obama care exchanges this year. Interestingly, Broussard stated in an interview that, “This is just not a business that we will be good at”. Ironic, since Humana is the fourth largest health insurer in the United States.

This got me to thinking about how healthcare is practiced differently on an individual versus an organizational basis. It is not only economically feasible that an insurance company as large as Humana with a market cap of 34.61 billion can leave the individual insurance market, but it is economically prudent and rewarded to do so as evidenced by its stock going up after this announcement.

Unfortunately, for those of us who make our living taken care people just such an act would be illegal, and ethically frowned upon. For example, on Monday, June 26 I will be taking call at our town’s busiest emergency department. If a patient comes in needing medical or surgical services for my specialty and I am called, I am expected to respond to this emergency (even when it isn’t) and take care of the patient, regardless of the patient’s insurance status. In fact, if I were to refuse to see the patient on the grounds of reimbursement I not only would be sanctioned by the hospital, but potentially the state and federal government.

Apparently the 2017 fiscal year subsidy as reported by the Center for Healthcare Research and Transformation at the University of Michigan of $95 billion paid to the private insurance industry, was not enough to keep them around.

 

Original:

http://www.cnbc.com/2017/06/22/humana-out-of-individual-market-with-or-without-obamacare-repeal.html

Further reading:

http://www.latimes.com/politics/la-na-pol-obamacare-humana-20170214-story.html

http://money.cnn.com/2017/04/04/news/economy/obamacare-tennessee/index.html

http://www.commercialappeal.com/story/opinion/columnists/2017/03/04/obamacare-subsidy-useless-if-insurance-companies-pull-out/98690182/

 

Killing innovation, Killing ourselves…

The most interesting article about medical innovation to come along in a while, A Future At Risk: Economic Performance, Entrepreneurship, and Venture Capital in the US Medical Technology Sector.

 This article was brought to my attention by one of my numerous readers (tip of the hat to TB) of this Healthcare blog because it points out one of the most essential components of the healthcare job market.  Not many people realize that during the economic downturns that occurred over the last 20 years healthcare has steadily increased its presence in the job market, yearly almost without fail.  One of the main reasons that this is occurring is because of the US medical technology sector.

Historically the United States has been at the forefront of medical innovation and more than half of all worldwide global value adding technology occurs in the US!  Between 1980 and 2010 Life expectancy for Americans increased by five years, mortality from breast cancer decreased 31%, and overall disability rates decreased 25%.  Medical technology has directly contributed to the betterment of mankind.

Unfortunately, with the changing healthcare market over the last 25 years there has been a decrease of medical venture capital, and an increasing consolidation of fewer companies fueling the pipelines of medical innovation.  The continued path that we are on, will only serve to place a stranglehold on innovation in the future and more healthcare goals further out of reach.  As an example of this type of merging of medically oriented investment capital consider the following: the number of meditech firms has decreased by two thirds from 1500 firms annually in the late 1970s to 600 firms in 2012; one third of meditech corporations are greater than a quarter century old! Meditech’s share of venture capital has decreased from 13% in the early 1990s to 4% in 2014.

Certainly, with all of the Silicon Valley technology that is being invested in increasing our longevity there has been an upturn in the interest of prolonging life, and mitigating suffering.  Unfortunately, do we sincerely believe that companies dedicated to search engines, space exploration, one-stop shopping and social networking are going to have the same cutting age medical/biological orientation?

If we are to continue to make progress against disease and improve life for everyone, not just those in the United States, there are some things that need to be focused on.  By no means is this an exhaustive list, but these are ideas that go a long way to help bring back medical innovation in the US:

  • More clearly delineated pathway for FDA medical device and drug approval that allows parity between the device pathway in the drug pathway
  • Mandated private insurance coverage that supports medical innovation
  • Medicare insurance coverage that supports medical innovation
  • Tax changes including the repeal of the medical device exemption (why do we tax a device that can save your life, and not subsidize it?)

Stay healthy…

Original: https://www.advamed.org/sites/default/…/a_future_at_risk_advamed_october_2016.p..

HEALTHCARE AND YOUR RIGHTS

With the, “Medicaid-for-all” Nevada assembly bill 374 dead at this time, one of the more interesting points about the argument is whether or not healthcare is a RIGHT.  Assembly Bill 374 which was created by Assemblyman Michael Sprinkle (D) Sparks was defeated; however, in his interview he advanced the idea that healthcare is a RIGHT.

This started me to thinking a lot about our different rights that we enjoy as US citizens, and in turn this led me to doing some research about rights. What I learned was that there is some disagreement about what is meant by, “rights” and there are no clear-cut answers. Depending upon who you are referencing a right for one individual may not be a right for another.

An example of this is the dichotomy of positive versus negative rights.  According to this conceptual framework a positive right is a permission to do something.  A negative right is where a person is permitted to do nothing. For example, in the United States, citizens have a positive right to counsel if they are accused of a serious crime. However, they have the negative right to vote. They can simply choose not to vote and there is no compulsory obligation.  Both are rights, but achieved differently.

When we are looking at the right to healthcare it would probably be more helpful if we were specific as to what we mean exactly. Some of the questions that are commonly asked about healthcare rights are:

  • Do you have the right to access healthcare?
  • Do you have the right to NOT purchase healthcare?
  • Do you have the right to seek alternative healthcare?
  • Do we have the right have government provided healthcare?

So, I would ask you as an individual that is invested in this outcome do you have a right to healthcare?  If so, what is that right?!? If not, why not?!? Both sides say a lot about us as individuals.

Please consider taking our poll and stay Healthy reader…..