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  • Russia to healthcare in one day. What now ?

    Posted by Michael Kennedy on March 30th, 2019 (All posts by )

    Last Friday, the Mueller report was submitted to the DOJ. Monday, left wing media saw ratings collapse.

    What next ? Why Healthcare, of course.

    Obamacare, which is a form of expanded Medicaid, costs too much and provides too little care (high deductibles) unless you are a Medicaid recipient. It was designed to shift costs to the insured from the poor. It also was a gift to certain sectors of the healthcare industry. Ted Kennedy criticized healthcare as a “cottage industry” with lots of independent doctors doing their own thing as small businesspeople. That is why doctors have traditionally been conservative. Obamacare changed that. Healthcare is now an industry with doctors mostly on salary and controlled by administrators.

    I talked to a young ophthalmologist last week, who had treated a mild eye disorder. He told me he moved to Tucson to work at U of Arizona medical center, which used to be called “UMC” by everybody in Arizona. He explained that the UMC administrators had gotten deeply into debt installing a new “Electronic Health Record” system and sold the UMC to Banner Health. This is a chain that runs the former UMC and has seen an exodus of university faculty physicians. Even my barber noticed. He told me several weeks ago that his surgeon, who had operated on him, got tired of constantly being told he only had 15 minutes to see each patient and left for the VA. The ophthalmologist was disappointed as he had looked forward to working at the academic center.

    Traditionally, administrators hated doctors. We made their lives more difficult by advocating for patients. I once told an administrator that if the hospital did not reduce the markup on pacemakers, I would testify for the patient if they sued him for the balance of the bill. They didn’t like it but knew I could go elsewhere,and take my patients there. If I had been an employee, I would not have that choice. Several years ago, I explained how we started a trauma center in our hospital. Since then, the hospital has been sold to a non-profit run by nuns. The surgical group that ran the trauma center for 35 years was fired two years ago. They had declined to sell the group to the hospital. They were replaced by six female surgeons no one had ever heard of and who had never applied for privileges at the hospital or been evaluated by the Surgery Department. No one knew anything about them except one member of this new group had applied for a job at the trauma group and been turned down.

    There were a few comments about some less satisfactory results on trauma cases but that has quickly gotten quiet.

    How did we get ourselves in this mess? I explained some of it in a post on the topic of healthcare reform.

    Health insurance in America began with unions and the Stone Cutters Union had the first health plan that would pay for delivering a baby in 1887. In 1945, the United Rubber Workers Union established a health plan that paid $50 for delivery of a normal pregnancy. For years, the doctors in Butler, PA had collected a fee of $50 for this service. That was the established fee. When the insurance began to pay this $50 fee, the doctors increased their fees to $75. Here was the beginning of the destruction of the profession although it seemed to be progress at the time. The union health plan increased its payment to $75 and the doctors then raised their fees to $125. They were now back to the original arrangement with patients. The patient paid $50 cash and the insurance paid the rest. Here was the fatal bargain. A third party was paying the bill and both the doctor and the patient had little responsibility. The cost issue began here. In 1969, my second son was born in Pasadena at a cost (hospital bill) of about $260. It was not covered by insurance. A few years later, with insurance paying the bill, the price was more than ten times that amount.

    I have been active in medical associations going back to the late 1970s. I was elected president of the Orange County Medical Association in 1986. I had been a delegate to the California Medical Association for years and was Chair of the Orange County delegation for years. I spent 8 years on the CMA Commission on State Legislation and a similar commission on Federal Legislation. In this commission, we met every month during the legislative session and reviewed all bills impacting the medical profession.

    From these vantage points, I watched the profession make serious, perhaps fatal, mistakes in the economics of the profession. When I began in practice, seven years after the Medicare and Medicaid programs were created by Lyndon Johnson, what was called “Indemnity Insurance” was still common. This web site has the definition wrong. Indemnity plans paid a flat fee for a procedure. An appendectomy might be covered for $150, for example. If “balance billing” is allowed, the situation would be analogous to the French system. That is partly explained here.

    The French citizen or resident joins Caisse Nationale d’Assurance Maladie deTravailleurs Salariés (CNAMTS)—health insurance organisation for salaried workers. That covers about 80% of the population now and it pays 80% (often more like 70%) of a fee schedule for the doctor visit although specialists are allowed to charge more. French doctors are divided for payment and fee schedule purposes into three “sectors” after 1980. Sector 1 doctors agreed to abide by the fee schedule established in 1960, modified for inflaton and technological changes. They are mostly primary care doctors although some had waivers from the fee schedule prior to 1971 because they were more experienced or had great reputations. Few are still practicing. Sector 2 doctors could set their own fees but reimbursement was still determined by the fee schedule.

    Thus, in the situation common in the early 70s, indemnity insurance plans paid a flat fee per procedure and the patient might be responsible for the balance. This introduced something of a market mechanism. If the patient sought out a particular specialist or was very pleased with the result, they might be willing to pay more than the insurance payment. If they had no other reason, the insurance payment would be the total reimbursement. Doctors were not pleased with this situation and began to argue for “Usual, Customary and Reasonable” feeds. Here is where medical fee inflation got going.

    This was a serious, if understandable, mistake.

    The fee schedules based on “UCR” were largely frozen based on your date of completion of training. At one time, it was not unusual for insurance companies its to pay new surgeons in the community higher rates than the more experienced. The inflation continued until American medicine got too expensive. The first attempt to control cost was the HMO or “Health Maintenance Organization” and was introduced in the Nixon Administration. It is based on the Kaiser system, in which doctors are enrolled in The Permanent Medical Group, which is a partnership that employers doctors on salary and provides care at Kaiser Foundation hospitals.

    This system began during the building of the Hoover Dam. Men were working in the desert with no city nearby. Sidney Garfield opened a clinic to care for the workers employEd by Kaiser who was the contractor. This was 1933.

    Sidney R. Garfield (17 April 1906[2] – 29 December 1984[3]) was a medical doctor and a pioneer of health maintenance organizations. He co-founded the Kaiser Permanente healthcare system with businessman Henry J. Kaiser. He graduated from the University of Iowa College of Medicine in 1928, which is now called the Roy J. and Lucille A. Carver College of Medicine.

    In 1933, Garfield opened his Contractor’s General Hospital in the Mojave Desert, east of Los Angeles, California. This hospital was set up to provide medical care for the 5,000 workers on the Metropolitan Water District of Southern California’s aqueduct, which was designed to bring water from the Colorado River to Los Angeles. Both locations were desert worksites and remote from medical care.

    The Kaiser Richmond Field Hospital for the Kaiser Shipyards, financed by the United States Maritime Commission, opened on August 10, 1942. It was sponsored by Henry J. Kaiser’s Permanente Foundation and Garfield was the Medical Director. The field hospital served as the mid-level component of a three-tier medical care system that also included six well-equipped first aid stations at the individual shipyards, and the main Kaiser Permanente hospital in Oakland, California, where the most critical cases were treated. Together, these facilities served the employees of the Kaiser shipyards who had signed up for the Permanente Health Plan (commonly referred to as the “Kaiser Plan”), one of the country’s first voluntary pre-paid medical plans, and a direct precursor to the Health Maintenance Organizations (HMOs) defined by the federal Health Maintenance Organization Act of 1973.

    The Kaiser facility in Oakland is still the largest in the Kaiser system. I was personally acquainted with the chief of Surgery at the Los Angles Kaiser hospital. He was an excellent surgeon but not always complimentary about his other surgeons. Kaiser now has its own medical school in Pasadena.

    HMOs were and are popular with some patients but rationing care is still an issue. The quality of Kaiser physicians has improved but the patient has no choice.

    The next attempt to control costs was “managed care.” This led to the creation of Preferred Provider Organizations, or “PPOs.” PPOs were often run by physicians but those were often entrepreneurial and far less concerned with quality of care than personal profit. I knew some of the doctors who ran these organizations. The method was to enroll physicians and then the group would contract with insurance companies. Payment was usually fee-for-service but compliance with “standards,” usually based on cost, was by bonuses. I knew many GPs whose annual bonus was equal to their annual compensation.

    Obamacare has replaced most of those mechanisms with an industrial system where the hospital owns the medical “group.” The doctors are hospital employees. Obamacare included a mandate to set up an Electronic Medical Record or pay a penalty. Why? To monitor physicians, not for quality but to monitor costs.

    Some thoughts on Obamacare and the EHR.

     

    2 Responses to “Russia to healthcare in one day. What now ?”

    1. Grurray Says:

      My wife’s elderly mother just contracted shingles on her face and has been seeing eye doctors. It’s a huge practice with eye surgeons, opthamologists, and optometrists. We obviously prefer her to see the surgeons because they are the most qualified. She has been scheduled with optometrists, who seem too quick to prescribe medications compared to the surgeons who understand risk better and are more willing to tinker around with alternatives. And we appreciate that. The steroid based medications have been causing a host of problems for her.

      The practice is affiliated with a local hospital group, as are all the practices here. It’s really a booming industry.

      That is one thing about where we live. I know we have been pointing out the myriad problems of Chicago lately – and rightly so, there are so many – but one thing we don’t lack is medical care. Most businesses are relocating to lower tax states, but doctors, hospitals, and associated medical services/products are expanding all over the place. If you are sick and dying, this is the place to be.

    2. Mike K Says:

      My brother-in-law, who had a serious stroke about 20 years ago but has gotten along fairly well thanks to my sister, went into the hospital several months ago for a GI bleed (Coumadin for years) and while there was asked a question he had never heard before. I understand it is the latest new fad. “Have you ever considered suicide ?” It had crossed his mind as life has not been the greatest the past few years. He also has bladder cancer. He answered “Yes” and was swiftly sent to the Psych ward with an armed security guard and two attendants. He spent a wasted day there being quizzed and finally allowed to go home. It had nothing to do with this medical issues.

      Watch out for that one. The bureaucrats are building empires.

      I’ll have a subsequent post on some ideas about what we could do with healthcare post Obamacare,