Really Fixing Our Medical System

Without question, in many ways the US medical system is the envy of most of the world. We have some of the best medical colleges, many of the best physicians, and state of the art hospitals. Also, our drug companies are some of the most productive in the world.

In spite of the above, our medical system is seriously broken. Medical outcomes often trail behind other countries with ostensibly lower quality care, and costs are exorbitant. It is true that some very positive steps have already been taken to reduce costs, such as capping physician and hospital fees via PPO contracts, bulk negotiation for reduced drug costs by large providers and insurers, and reducing the cost of the “paper jungle” in hospitals via automation.

While the above is all positive, the system is still like an albatross around the neck of the ultimate payors (individuals and employers). While many hospitals are charitable and offer discounts to the uninsured, and many general practitioners take on geriatric patients knowing they will not be adequately reimbursed by Medicare, most people have a sense that the cost of the system is simply out of control. Even people covered by comprehensive PPO plans, where in-network providers accept strict fee caps imposed by the insurer, suffer from having to pay high premiums and steep out-of-pocket payments. Further, providers compensate for PPO and Medicare fee caps by shifting cost to insured’s that are covered by insurance plans that they don’t have a fee contract with. The end result is that almost everyone finds medical care too expensive.

I believe the system can be fixed, but it will require great political courage, as well as a willingness on the part of the American public to trash some currently held sacred beliefs. Nothing this complex can be solved by a simple or easy to swallow quick fix. It requires a comprehensive, and quite honestly, painful set of steps.

Detailed Plan

Force Hospitals To Adopt Smart Automation

I’m referring here to the type of advanced automation that minimizes duplication of services, administration of treatments that may be dangerous due to drug interactions, etc. In the US, professional firms (medical clinics, law offices, etc.) are notoriously IT illiterate. The Obama administration should provide tax incentives to spawn a cottage industry of consultants to help health care providers select and implement medical information management systems that really drive costs down by averting wasteful and dangerous decisions. Hospitals that fail to adopt smart automation within a certain period of time would become uncompetitive and driven out of business.

Reduce The Implementation Cost For New Drugs

Factoring in the cost of research, getting FDA (Food and Drug Administration) approval, and marketing expense, it now costs a drug maker over $1 billion USD to bring a new drug to market. Only about 20% of this amount is for actual research. The rest is just regulatory approval (performing tests and submitting trial data) and marketing. The FDA needs to streamline and speed up the approval process, and then issue detailed public information so doctors and patients can make drug decisions without relying on the drug maker’s expensive TV campaigns (which would hopefully become useless and cease). Admittedly, less stringent testing before approval will lead to some incremental public danger (drugs that would have been disapproved instead of being marketed for a time before losing accreditation due to poor effectiveness or dangers not flagged earlier), but this is a cost we will have to bear if we wish to reign in the rapidly growing cost of drugs.

Set Reasonable Caps On Doctor Compensation

In the US, the individual states regulate the insurance industry (not the federal government). The state insurance commissioners need to get together and set limits on per hour expenses that doctors can receive for specific procedures from insurance policies. Insurance policies that violate these caps should not be approved for public sale. The idea would be to set the caps high enough so that the medical profession continues to attract competent people, but not so high that some jerk gets $500,000 per year just for analyzing X-rays.

Get Really Tough On Tort Reform

While this is a hard on patients that suffer the results of medical malpractice, we need to limit malpractice awards from juries to actual economic damages, plus reasonable punitive damages in cases of gross negligence. Payments for “pain and suffering” need to be eliminated. Admittedly, this is controversial, as such damages are routinely awarded in non-medical civil cases where they are deemed appropriate by the jury. The problem is that juries are awarding enormous pain and suffering damages out of sympathy for the damaged patient, driving malpractice insurance costs through the roof, and thus contributing in a major way to the overall medical cost problem.

Take Religion Out Of Medicine

While we may have seemed to veer to the left in the last election, real decision making in the US is controlled by a small clique of wealthy, very conservative people. The religious right interprets the “right to life” as “the obligation to live.” This has impacted medical care in a major way. Heroic, hugely expensive measures are taken, using insurance as a major payment vehicle, to keep people alive for short periods of time in very poor health condition. The decision to provide insured coverage for life saving treatments should be made on a cost/benefit basis, comparing the cost of the coverage with the overall anticipated benefit (added years of life, and expected quality of those years). Procedures that don’t meet the test should be denied (unless the patient can pay the cost himself), and instead the insurance should merely provide for keeping the patient as comfortable as possible until death (e.g., pain killers, psychological support, etc.). This is the approach taken in a number of Northern European countries, which incidentally have excellent medical care systems. The far right’s idea that everyone has an obligation to live as long as possible, no matter how miserable they are, is both ridiculous and anachronous.

Encourage International Cooperation Regarding Prescription Drugs

The US badly needs to cooperate with foreign countries to determine standards of accreditation for proprietary and generic drug makers. Accredited foreign manufacturers should be able to legally import their locally approved drugs to the US (right now the FDA forbids it). This would foster international competition with respect to drug prices, which would greatly benefit US consumers (right now, we pay far more than anyone else for drugs).

While our medical system is badly broken, it can be fixed with courage and hard work. The real impediment to a substantive correction is human nature, namely greed and cowardice:

  • Legislators that are too beholden to drug company political contributions to allow Medicare to negotiate pricing for medications
  • Hospital administrators that are afraid of technological change
  • Doctors that sometimes charge outrageous fees for minimal work
  • Patients expecting to get the best of everything regardless of cost/benefit considerations
  • Society being too afraid to let go of outdated religious conceptions
  • Government being too cowardly to fast track promising drugs and open the market to imports
  • Legislators being too greedy to repel the legal lobby and institute drastic medical tort reform

There is way too much hand wringing about insurance costs. The insurers are simply intermediaries, and they do not make extravagant returns on capital. The root cause of the problem is excessive cost at the provider level (hospitals, physicians, etc.). Until the etiology of the problem is solved, the symptoms will remain. The cure is a little like castor oil – it tastes terrible going down, but eventually you feel a lot better. Also, as with castor oil, you won’t take it unless your mother forces you to. With all the vested interests here, real change won’t occur unless Obama forces it down our collective throats.

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This entry was posted on Wednesday, December 23rd, 2009 at 12:43 am and is filed under Medical News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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