Gyroscopic Investing

Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks. Here’s how this whole debate goes. Advocates of a public option say government financing would save the most money by having leaner administrative costs and forcing doctors and hospitals to take lower payments than they get from private insurance. Opponents say doctors would skimp, quit, or game the system, and make us wait in line for our care; they maintain that private insurers are better at policing doctors. No, the skeptics say: all insurance companies do is reject applicants who need health care and stall on paying their bills. Then we have the economists who say that the people who should pay the doctors are the ones who use them. Have consumers pay with their own dollars, make sure that they have some “skin in the game,”? and then they’ll get the care they deserve. These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor will make no more difference than changing who pays the electrician. The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care. Otherwise, you get a system that has no brakes. You get McAllen.

One afternoon in McAllen, I rode down McColl Road with Lester Dyke, the cardiac surgeon, and we passed a series of office plazas that seemed to be nothing but home-health agencies, imaging centers, and medical-equipment stores.

“Medicine has become a pig trough here,”? he muttered.

Dyke is among the few vocal critics of what’s happened in McAllen. “We took a wrong turn when doctors stopped being doctors and became businessmen,”? he said.

Pointedstick wrote: If it would be the same as who pays the electrician, then in my opinion this proves the economists right. When I pay my electrician, I give her a few hundred bucks every now and then when I need her services. Imagine if instead every time I needed her to do some work, I submitted a claim on my homeowner's insurance. It should be patently obvious that she would bill my homeowner's insurance company more than the cash price would have been, and that price competition between her and other local electricians would vanish. And the whole thing would become gummed up with co-pays, co-insurance, in-network electricians, out-of-pocket minimums, etc. My homeowner's insurance premiums would doubtless rise.

Also, as Pugchief LOL'd, the assumption that government management results in "leaner administrative costs" appears to be completely detached from reality in America except for a very, very small handful of programs that were instituted many decades ago.

The core tenet of the Mayo Clinic is “The needs of the patient come first”?—not the convenience of the doctors, not their revenues. The doctors and nurses, and even the janitors, sat in meetings almost weekly, working on ideas to make the service and the care better, not to get more money out of patients. I asked Cortese how the Mayo Clinic made this possible.

“It’s not easy,”? he said. But decades ago Mayo recognized that the first thing it needed to do was eliminate the financial barriers. It pooled all the money the doctors and the hospital system received and began paying everyone a salary, so that the doctors’ goal in patient care couldn’t be increasing their income. Mayo promoted leaders who focussed first on what was best for patients, and then on how to make this financially possible.

No one there actually intends to do fewer expensive scans and procedures than is done elsewhere in the country. The aim is to raise quality and to help doctors and other staff members work as a team. But, almost by happenstance, the result has been lower costs.

“When doctors put their heads together in a room, when they share expertise, you get more thinking and less testing,”? Cortese told me.
Skeptics saw the Mayo model as a local phenomenon that wouldn’t carry beyond the hay fields of northern Minnesota. But in 1986 the Mayo Clinic opened a campus in Florida, one of our most expensive states for health care, and, in 1987, another one in Arizona. It was difficult to recruit staff members who would accept a salary and the Mayo’s collaborative way of practicing. Leaders were working against the dominant medical culture and incentives. The expansion sites took at least a decade to get properly established. But eventually they achieved the same high-quality, low-cost results as Rochester. Indeed, Cortese says that the Florida site has become, in some respects, the most efficient one in the system.

The Mayo Clinic is not an aberration. One of the lowest-cost markets in the country is Grand Junction, Colorado, a community of a hundred and twenty thousand that nonetheless has achieved some of Medicare’s highest quality-of-care scores. Michael Pramenko is a family physician and a local medical leader there. Unlike doctors at the Mayo Clinic, he told me, those in Grand Junction get piecework fees from insurers. But years ago the doctors agreed among themselves to a system that paid them a similar fee whether they saw Medicare, Medicaid, or private-insurance patients, so that there would be little incentive to cherry-pick patients. They also agreed, at the behest of the main health plan in town, an H.M.O., to meet regularly on small peer-review committees to go over their patient charts together. They focussed on rooting out problems like poor prevention practices, unnecessary back operations, and unusual hospital-complication rates. Problems went down. Quality went up. Then, in 2004, the doctors’ group and the local H.M.O. jointly created a regional information network—a community-wide electronic-record system that shared office notes, test results, and hospital data for patients across the area. Again, problems went down. Quality went up. And costs ended up lower than just about anywhere else in the United States.

“It’s malpractice,”? a family physician who had practiced here for thirty-three years said.

“McAllen is legal hell,”? the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere.

That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down?

“Practically to zero,”? the cardiologist admitted.

“Come on,”? the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here, pure and simple.”? Doctors, he said, were racking up charges with extra tests, services, and procedures.

The surgeon came to McAllen in the mid-nineties, and since then, he said, “the way to practice medicine has changed completely. Before, it was about how to do a good job. Now it is about ‘How much will you benefit?’ ”?

MangoMan wrote: Regardless, treatment done for the enrichment of the provider is unethical and disgusting. And, of course, every reasonable precaution should be taken to avoid malpractice in the first place.

“It’s not easy,”? he said. But decades ago Mayo recognized that the first thing it needed to do was eliminate the financial barriers. It pooled all the money the doctors and the hospital system received and began paying everyone a salary, so that the doctors’ goal in patient care couldn’t be increasing their income. Mayo promoted leaders who focussed first on what was best for patients, and then on how to make this financially possible.

No one there actually intends to do fewer expensive scans and procedures than is done elsewhere in the country. The aim is to raise quality and to help doctors and other staff members work as a team. But, almost by happenstance, the result has been lower costs.

MangoMan wrote:

Advocates of a public option say government financing would save the most money by having leaner administrative costs

Hahahaha, roflmao.

stone wrote: It has to be stressed that the author isn't advocating government management. He is saying that it ISN'T the answer. He is advocating a system such as Mayo clinic. That's apparently a system where the doctors take responsibility over ensuring that patients get the most effective care, avoiding financial incentives that conflict with that.
The problem with medicine is that the customer is not in a position to themselves know what is best. They are at the mercy of the doctors because only the doctor knows what's what. The doctors have to take on board that responsibility.

MangoMan wrote: The finances are not the only conflict. Much of the testing gets done to avoid malpractice lawsuits. Idk if Mayo covers the liability for their docs or not, but the only way to get rid of the costs from this angle is tort reform. I am incredulous that the ACA did not think to include this if they really wanted to change healthcare for the better and bring down costs.

TennPaGa wrote: I agree it would be easier for health care professionals to foist their mistakes on others rather than take responsibility for them and fix them.

And so we
worked with a team from … from the airline industry to design what emerged as just a checklist
– a checklist though that was made specifically to catch the kinds of problems that even experts
will make mistakes at doing. Most often basically failures of communications. The checklist had
some dumb things – do you have the right patient, do you have the right side of the body you’re
operating on, have you given an antibiotic that can reduce the infections by 50 per cent, have you
given it at the right time? But the most powerful components are does everybody on the team
know each other’s name and role, has the anaesthesia team described the medical issues the
patient has? Has the surgeon briefed the team on the goals of the operation, how long the case
will take, how much blood they should be prepared to give? Has the nurse been able to outline
what equipment is prepared? Are all questions answered? And only then do you begin.
Well the result after we tested in eight cities around the world - including right here at St. Mary’s
Hospital in London, in Toronto, in Seattle, also in Delhi, in Tanzania – was that in every hospital
that used the checklist, the experts found that their complication rates fell. The average reduction
in complications was 35 per cent. The average reduction in deaths was 47 per cent. And it’s been
replicated in multiple places. Scotland has implemented it and taught it at the frontlines and they
have now demonstrated that 9,000 people lives have been saved over the last 4 years.
Now what we know is it’s clearly not just the checklist. It’s not some piece of paper you hand
out as a kind of tick box exercise. We’ve had to form an organisation called Lifebox that brings these capabilities to the low and middle income world, and what we’ve found is the hardest part
is to bring the culture that has the humility to recognise that even the most experienced people,
even the most expert fail, and that we need the humility to be able to understand that.
But across many fields, we’re seeing now that you know our design has been around the idea of
the individual instead of the system, around the drug or the device or the specialist, the
reductionist ideal instead of how it all fits together. We fear these kinds of system. We fear that
it’ll be a loss of daring, it’ll be a loss of heroism. But we surveyed surgeons and asked them,
“You know what do you think about this approach?”? 3 months after they adopted it, and we
found that about 20 per cent or more really dislike it. Like you know “It’s paperwork, it’s a pain
in the butt, I don’t want to do this.”? And then we ask, “If you’re having an operation, would you
want the team to use the checklist?”? Ninety-four per cent did. And what you discover is that
discipline makes daring possible.

It's pretty sad that most of the intellectual effort now goes into navigating the complex waters of billing, coding, and documenting, and also in creating new revenue streams.  Which is what businesses are designed to do.  If there were some way to make all this go away, we'd be immeasurably happier...but I just can't see it happening anytime soon, nor how it might happen.

MachineGhost wrote:

stone wrote: It has to be stressed that the author isn't advocating government management. He is saying that it ISN'T the answer. He is advocating a system such as Mayo clinic. That's apparently a system where the doctors take responsibility over ensuring that patients get the most effective care, avoiding financial incentives that conflict with that.
The problem with medicine is that the customer is not in a position to themselves know what is best. They are at the mercy of the doctors because only the doctor knows what's what. The doctors have to take on board that responsibility.

Huh?  You mean the doctor needs to take on that responsibility instead of the insurance companies?  Because due to the Internet, patients are very informed now and know as much as or more than a doctor does about treating their own conditions.  Only the uninformed poor (or the dying old farts of the Greatest Generation) are still in that stereotypical naive/ignorant "worship all authority" category.  Maybe it is different in the UK where medical mediocrity is socially universal due to the NHS.  Here, you can still find pockets of above averageness.  To quote Buffett again, "Competition is a wonderful thing."

The only problem with the Mayo model is you won't get offered the widest range of possible options only what fits within the prevailing orthodoxy which is still based on a Big Pharma business model.  But it is a huge step in the right direction.  It's just not being replicated very fast because it is bad for business.  99% of doctors that stick through the first year of medical school stay because of the money not because they are humanitarians.

The third class of health-cost proposals, I explained, would push people to use medical savings accounts and hold high-deductible insurance policies: “They’d have more of their own money on the line, and that’d drive them to bargain with you and other surgeons, right?”?

He gave me a quizzical look. We tried to imagine the scenario. A cardiologist tells an elderly woman that she needs bypass surgery and has Dr. Dyke see her. They discuss the blockages in her heart, the operation, the risks. And now they’re supposed to haggle over the price as if he were selling a rug in a souk? “I’ll do three vessels for thirty thousand, but if you take four I’ll throw in an extra night in the I.C.U.”?—that sort of thing? Dyke shook his head. “Who comes up with this stuff?”? he asked. “Any plan that relies on the sheep to negotiate with the wolves is doomed to failure.”?

TennPaGa wrote:

stone wrote:
Although I'm very enthusiastic about that checklist system, I don't share your faith that malpractice lawsuits are an effective way to bring it about. A lot of the improvement in outcomes ends up being statistical -you get 4000 out of 100000 patients with some complication rather than 6000 out of 100000. It is typically impossible to pin down an individual's bad outcome on the doctor not following the ideal procedures. BUT malpractice lawsuits just don't work for ensuring such statistical improvements -they are all about the individual case.

As far as I can see that checklist movement has been motivated by professional responsibility -doctors wanting to be the best they can be. To my mind that is the real motivator for the best healthcare systems. What we need are systems that unleash that motivational force.

I never wrote that that malpractice lawsuits are an effective way to bring about change.  However, I am weary of medical professionals beating the drum for tort reform while at the same time failing to address their own behaviors which are detrimental to patient outcomes.  It comes across as believing the profession does not need to be accountable to patients, only money.

stone wrote: WiseOne says,

It's pretty sad that most of the intellectual effort now goes into navigating the complex waters of billing, coding, and documenting, and also in creating new revenue streams.  Which is what businesses are designed to do.  If there were some way to make all this go away, we'd be immeasurably happier...but I just can't see it happening anytime soon, nor how it might happen.

-doesn't that Mayo Clinic model where doctors don't have to "earn" through medical billing, solve the problem? I'm asking, you seem to not believe it but to my naive mind it looks like a solution with a track record of working?

I know physicians at Mayo and yes, they have to earn through billing like everyone else.  It's the only way to get money from insurance companies and CMS.

Mayo recognized that the first thing it needed to do was eliminate the financial barriers. It pooled all the money the doctors and the hospital system received and began paying everyone a salary, so that the doctors’ goal in patient care couldn’t be increasing their income. Mayo promoted leaders who focussed first on what was best for patients, and then on how to make this financially possible.

No one there actually intends to do fewer expensive scans and procedures than is done elsewhere in the country. The aim is to raise quality and to help doctors and other staff members work as a team. But, almost by happenstance, the result has been lower costs.

I talked to Denis Cortese, the C.E.O. of the Mayo Clinic, which is among the highest-quality, lowest-cost health-care systems in the country. A couple of years ago, I spent several days there as a visiting surgeon. Among the things that stand out from that visit was how much time the doctors spent with patients. There was no churn—no shuttling patients in and out of rooms while the doctor bounces from one to the other. I accompanied a colleague while he saw patients. Most of the patients, like those in my clinic, required about twenty minutes. But one patient had colon cancer and a number of other complex issues, including heart disease. The physician spent an hour with her, sorting things out. He phoned a cardiologist with a question.

“I’ll be there,”? the cardiologist said.

Fifteen minutes later, he was. They mulled over everything together. The cardiologist adjusted a medication, and said that no further testing was needed. He cleared the patient for surgery, and the operating room gave her a slot the next day.

The whole interaction was astonishing to me. Just having the cardiologist pop down to see the patient with the surgeon would be unimaginable at my hospital. The time required wouldn’t pay. The time required just to organize the system wouldn’t pay.

The core tenet of the Mayo Clinic is “The needs of the patient come first”?—not the convenience of the doctors, not their revenues. The doctors and nurses, and even the janitors, sat in meetings almost weekly, working on ideas to make the service and the care better, not to get more money out of patients. I asked Cortese how the Mayo Clinic made this possible

stone wrote:

I talked to Denis Cortese, the C.E.O. of the Mayo Clinic, which is among the highest-quality, lowest-cost health-care systems in the country. A couple of years ago, I spent several days there as a visiting surgeon. Among the things that stand out from that visit was how much time the doctors spent with patients. There was no churn—no shuttling patients in and out of rooms while the doctor bounces from one to the other. I accompanied a colleague while he saw patients. Most of the patients, like those in my clinic, required about twenty minutes. But one patient had colon cancer and a number of other complex issues, including heart disease. The physician spent an hour with her, sorting things out. He phoned a cardiologist with a question.

“I’ll be there,”? the cardiologist said.

Fifteen minutes later, he was. They mulled over everything together. The cardiologist adjusted a medication, and said that no further testing was needed. He cleared the patient for surgery, and the operating room gave her a slot the next day.

The whole interaction was astonishing to me. Just having the cardiologist pop down to see the patient with the surgeon would be unimaginable at my hospital. The time required wouldn’t pay. The time required just to organize the system wouldn’t pay.

The core tenet of the Mayo Clinic is “The needs of the patient come first”?—not the convenience of the doctors, not their revenues. The doctors and nurses, and even the janitors, sat in meetings almost weekly, working on ideas to make the service and the care better, not to get more money out of patients. I asked Cortese how the Mayo Clinic made this possible