Paging Dr. Gawande: Health Reform Matters

Atul Gawande’s article “The Cost Conundrum” offers a distinctively moral perspective on health reform. It has also become a cause celebre in policy circles. The Obama White House is reading it, leading journal Health Affairs has sponsored a roundtable on it, and pundits across the political spectrum are invoking it.

There are good reasons for all the attention in health reform circles. But there’s a paradox here, too, because Gawande doesn’t believe that changes to health care finance and regulation can deter the wasteful and uncoordinated provider behavior which he sees at the root of the present crisis. I respectfully disagree. Law may not be doing a good job at this now—largely because health care regulators over the past 20 years vastly overestimated the degree to which the market would improve quality and access. But we have a rare window of opportunity to correct for those assumptions. Moreover, without real reform, the profit-obsessed providers who are the villains of Gawande’s piece will systematically outcompete the integrated delivery systems he champions. Gresham’s Law applies in health care, too.

First, some background. Gawande compares a high-cost Texas town (McAllen) with a nearby, low-cost one (El Paso). He finds very little in the McAllen extravagance that is actually improving the longevity or quality of life of its residents. The piece describes in some detail how commercial imperatives affected medical practice in McAllen:

[M]any physicians are remarkably oblivious to the financial implications of their decisions. They see their patients. They make their recommendations. They send out the bills. And, as long as the numbers come out all right at the end of each month, they put the money out of their minds.

Others think of the money as a means of improving what they do. They think about how to use the insurance money to maybe install electronic health records with colleagues, or provide easier phone and e-mail access, or offer expanded hours. They hire an extra nurse to monitor diabetic patients more closely, and to make sure that patients don’t miss their mammograms and pap smears and colonoscopies.

Then there are the physicians who see their practice primarily as a revenue stream. They instruct their secretary to have patients who call with follow-up questions schedule an appointment, because insurers don’t pay for phone calls, only office visits. They consider providing Botox injections for cash. They take a Doppler ultrasound course, buy a machine, and start doing their patients’ scans themselves, so that the insurance payments go to them rather than to the hospital. They figure out ways to increase their high-margin work and decrease their low-margin work. . . .

In every community, you’ll find a mixture of these views among physicians, but one or another tends to predominate. McAllen seems simply to be the community at [the high-cost] extreme.

Gawande describes a market gone wild in McAllen, where doctors would demand “four or five thousand [dollars] a month” or even sex in exchange for routing their patients to certain home health agencies.

How does such a culture of commercialization develop? Gawande is not a social scientist, but he can extrapolate from his own experience. He knows how physicians mentor one another and provide models of care. He also mentions the work of Woody Powell, who examines how certain leading institutions can set the tone for much of an economic community. These “anchor tenants” led McAllen’s “medical community . . . to treat patients the way subprime-mortgage lenders treated home buyers: as profit centers.”

Gawande contrasts McAllen with several centers of excellence in health care, including the Mayo Clinic and a Grand Junction, Colorado network of physicians. Mayo doctors are salaried, and in Grand Junction “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 [and lemon-drop] patients.” A local HMO encouraged the Grand Junction doctors to meet and “focus[] on rooting out problems like poor prevention practices, unnecessary back operations, and unusual hospital-complication rates.” As a result, quality improved, cost declined, and Grand Junction Medicaid patients enjoyed higher rates of effective access than average.

It would seem that a health reform ought to focus on encouraging these types of interventions. But in an interview with Ezra Klein, Gawande is strangely agnostic on whether law can change much:

My vantage point on the world is the operating room where I see my patients. And trying to think about whether a public option would change anything didn’t connect. I order something like $20,000 or $30,000 of health care in a day. Would a public or private option change that?

People say that the most expensive piece of medical equipment is the doctor’s pen. It’s not that we make all the money. It’s that we order all the money. We’re hoping that Medicare versus Aetna will be more effective at making me do my operations differently? I don’t get that. Neither one has been very effective thus far.

I think there are several misconceptions in that quote. First, the public option is not designed to displace private insurance. It’s supposed to be a benchmark for private plans, to incentivize them to act more constructively. Second, Gawande is here invoking his own perspective, that of “good” physicians, those who push “the money out of their minds” as they decide courses of treatment. Law, as Justice Holmes reminds us, should be written and interpreted with the proverbial “bad man” in mind, who “cares only for the material consequences which [knowledge of law] enables him to predict.”

Many of the rules of health care finance and regulation address exactly the types of problematic behavior discussed in the article. Niche facilities and imaging centers are at the cutting edge of the commercialization Gawande worries about. Lawyers have debated them for years, and the policymaking is still ongoing. HHS set a moratorium on the development of specialty hospitals in 2003, but it expired. This led to a flurry of interest in administrative action designed to address specialty hospitals’ “cherry-picking” of lucrative patients and “lemon dropping” of costly cases onto other hospitals. Something as obscure as “certificate of need” rules (operating at a state level) have proven critical in determining the spread of specialty hospitals. Reports from the GAO and the Medicare Payment Advisory Commission have investigated their impact, while CMS rulemakings have focused on re-assessing payment levels for procedures at ambulatory surgical centers. Antitrust litigation could also play a pivotal role in the struggles between general and specialty hospitals for what Gawande calls the “soul of medicine.”

In the article, Gawande repeatedly talks about “blunting financial incentives” for bad medicine or patient cherrypicking. But that’s exactly the charge of the Medicare Payment Advisory Commission (MedPAC) in its examinations of developments like niche providers. State policymakers can also reflect these concerns in various ways–adjusting nonprofit status, facilities licensure rules, taxation, and many other legal variables.

In other words, law matters. Sure, all these laws can be bent in ways that favor the further commercialization of medicine. Much of any book on health care finance regulation is a tale of frustrated hopes and dashed ambitions. But this body of law at least provides some tangible guide to past and potential realignments of incentives–something that can’t be said for the appeals to cultural change at the core of Gawandean quietism.

Gawande concedes that “In the war over the culture of medicine—the war over whether our country’s anchor model will be Mayo or McAllen—the Mayo model is losing.” Calls for cultural change just aren’t being heeded—and why should they be? If an insurer develops an extremely effective protocol for dealing with the chronically ill, it will be rewarded by the market with. . . . more expensive, chronically ill patients wanting to sign up for it. As things stand now, providing high-quality care for the chronically ill is a great way to go out of business in virtually any market where your competitors can “skim the cream” of the healthiest half of the population, who only demand about 3% of health care spending. Health reform (including real risk adjustment to properly compensate such plans) can help change that.

Gawande’s “Cost Conundrum” could be to health reform what Sinclair’s “The Jungle” was to food safety. It explains current trends in the commercialization of medicine better than virtually any journalistic work out there. Sadly, it appears that its author is now more inclined to “stay above the fray” than to try to articulate and lobby for the regulatory infrastructure necessary for the cultural change he so eloquently advocates.

X-Posted at: Concurring Opinions.

Atul Gawande: Why McAllen Texas Kant be the answer to health reform

“Act in such a way that you treat humanity, whether in your own person or in the person of any other, always at the same time as an end and never merely as a means to an end. ”

-Immanuel Kant, Groundwork of the Metaphysic of Morals^[1]

Atul Gawande has done it again. He has written a piece for the New Yorker that you simply have to read:  “The Cost Conundrum.What a Texas town can teach us about health care.“

Gawande writes that McAllen “is one of the most expensive health-care markets in the country. Only Miami-which has much higher labor and living costs-spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.”

El Paso, Texas, similarly situated, spends significantly less- half as much. The why of it is absolutely compelling. And it struck me while reading that what Gawande finds is essentially a medical culture functioning, and incentivized, contrary to Kant’s categorical imperative (see above): the simple moral admonition that one must not merely “use” others.

Might I suggest that it is passing strange to find ourselves, in the midst of such daunting medical, technical, and financial data contained within the  proposed solutions and counter-solutions to arrive at this–a simple (but difficult) age old moral truth?

Pragmatically, as one looks upon the current system of health care and health care finance,  it is well worth quoting Harold Luft from today’s Washington Times: “A redesigned system must create new incentives for those entities so their self-interested behavior leads to a better societal outcome.” Gawande offers examples of systems which provide an infrastructure conducive to Mr. Kant’s imperative.

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?currentPage=1

Electronic Medicine, iPhones and Path-Dependence

Atul Gawande writes about “path-dependence” in his wonderfully thought out article on the evolution of health care systems. If you haven’t yet read it (it’s in the sidebar under “Best of Magazines” and here) I highly recommend you take the time to do so. As it stands, however, I will use his description not in the context within which it was written, but as a means to think about the implications of the rise of iPhone and Blackberry usage for medical applications. He writes:

Every industrialized nation in the world except the United States has a national system that guarantees affordable health care for all its citizens. Nearly all have been popular and successful. But each has taken a drastically different form, and the reason has rarely been ideology. Rather, each country has built on its own history, however imperfect, unusual, and untidy.

Social scientists have a name for this pattern of evolution based on past experience. They call it “path-dependence.” In the battles between Betamax and VHS video recorders, Mac and P.C. computers, the QWERTY typewriter keyboard and alternative designs, they found that small, early events played a far more critical role in the market outcome than did the question of which design was better. Paul Krugman received a Nobel Prize in Economics in part for showing that trade patterns and the geographic location of industrial production are also path-dependent. The first firms to get established in a given industry, he pointed out, attract suppliers, skilled labor, specialized financing, and physical infrastructure. This entrenches local advantages that lead other firms producing similar goods to set up business in the same area-even if prices, taxes, and competition are stiffer. “The long shadow cast by history over location is apparent at all scales, from the smallest to the largest-from the cluster of costume jewelry firms in Providence to the concentration of 60 million people in the Northeast Corridor,” Krugman wrote in 1991.

With path-dependent processes, the outcome is unpredictable at the start. Small, often random events early in the process are “remembered,” continuing to have influence later. And, as you go along, the range of future possibilities gets narrower. It becomes more and more unlikely that you can simply shift from one path to another, even if you are locked in on a path that has a lower payoff than an alternate one.

The political scientist Paul Pierson observed that this sounds a lot like politics, and not just economics. When a social policy entails major setup costs and large numbers of people who must devote time and resources to developing expertise, early choices become difficult to reverse. And if the choices involve what economists call “increasing returns”-where the benefits of a policy increase as more people organize their activities around it-those early decisions become self-reinforcing. America’s transportation system developed this way. The century-old decision to base it on gasoline-powered automobiles led to a gigantic manufacturing capacity, along with roads, repair facilities, and fuelling stations that now make it exceedingly difficult to do things differently.

Increasingly, the primary location for e-Med technology seems to be the pockets of doctors: in iPhones and Windows based Blackberries.

A Washington Post article, “New Tool in the MD’s Bag: A Smartphone,” states that “Nationally, about 64 percent of doctors are now using smartphones, according to a recent report by the market research company Manhattan Research.” Georgetown’s medical school has recently begun requiring them, and Ohio State’s is handing out the iPod Touch (sans phone) to its students. Mike McCarty, the chief network officer at John Hopkins Health Systems, “believes that smartphones will soon assume a permanent place in medicine.”

As such, designers have engineered applications to suit the needs of those doctors. And as a matter of path-dependence, presumably they will continue to do so. WaPo states that “the iTunes app store lists 674 applications related to medicine available.” There are iPhone and Blackberry apps to “pull up instructional diagrams and videos for patients, write electronic prescriptions and check basic information,” “look up drug-to-drug interactions, to view X-rays and MRI scans,” and even determine pill names derived from physical descriptions.

As we posted a while back,

In the words of Dr. Farzad Mostashari,  an assistant commissioner in New York City’s health department and head of the much heralded Primary Care Information Project (which is functioning as a sort of I.T. Department for many of the City’s doctors using EMR),  “There’s no way small practices can effectively implement electronic health records on their own. This is not the iPhone.”

Later, we noted that in their NEJM article,  No Small Change for the Health Information Economy, Kenneth D. Mandl, M.D., M.P.H., and Isaac S. Kohane, M.D., Ph.D. suggest that it should be. That

As do Professors Sharona Hoffman and Andy Podgurski, the authors of “No Small Change…” stress the need for flexibility, interoperability, liquidity of information, and the ability to substitute technologies as the need arises.  To do this they propose governmental encouragement of the use of a platform with interoperable applications (blog builders, think: “plug ins” and “widgets”)

similar to the iPhone.

We also noted in that post, “Electronic Medical Records: It’s Not too Late to Build the Tower on an Interoperable Platform,” that

Perhaps the good news here is that the relative scarcity of EMR implementation thus far means that we can yet still devise an interoperable system without rendering substantial but incompatible investments obsolete. Which is to say that we are not yet too far down nine different non-intersecting roads and that “a communicative Tower” can still be built, and sustained, on a Platform.

Now, it seems the path is beginning to emerge–and that interoperable system may actually be the iPhone and Blackberry platforms–which, it seems, are already sitting in doctors’ pockets.

Model Wanted

The NY Times reports that according to Dr. Atul Gawande, a surgeon at Brigham and Women’s Hospital in Boston and an associate professor at the Harvard School of Public Health, “there’s a drastic decline in the number of geriatricians - and just 300 new ones are being trained each year - yet the number of people over 65 will double in the next 20 years. Those who work in geriatric care are among the worst paid in the health care system.”

That last statement, as shown in a recent post regarding physician compensation, is backed up by numbers. According to the American Group Medical Association (AMGA) the median compensation for a geriatrician is $179,344. The median compensation for a podiatrist is $180,080. These AMGA numbers have been approved by the Center for Medicare and Medicaid Services (CMS) for use in CMS related calculations.

Dr. Gawande “and others see a pressing need for new approaches to keep aging patients as healthy as possible and living independently as long as possible.” The Times reports that “Dr. Chad Boult, a geriatrician at Johns Hopkins School of Public Health in Baltimore, says the goal should be care that is well coordinated, and patients and families who are involved in and educated about the care plan.”

To that end, Dr. Boult is participating in the testing of a “team approach” which is somewhat reminiscent of the subject of a recent post, Alaska’s Southcentral Foundation’s “medical home” approach. Southcentral’s “comprehensive” health care strategy has shown some promising results. The Times reports that

Dr. Boult is involved in testing a team approach, in which nurses trained in geriatrics are helping physicians in the Baltimore-Washington area provide coordinated care for 50 or 60 of their highest-risk older patients. The nurses go to patients’ homes, develop comprehensive care plans, help the patients in self-monitoring, help them overcome obstacles to self-care and connect patients and their families to community agencies.

According to geriatrics experts, social workers trained in the problems of the elderly can also participate by performing home assessments, for example, to prevent falls and costly, disabling fractures. They can help overcome barriers to good nutrition, and they can help make the community connections for assistance with the activities of daily living, like shopping.
Dr. Boult said that “The Baltimore team project has already demonstrated an improvement in the quality of care that ailing elderly patients receive, and by keeping patients out of the hospital, he expects it will save money for insurers like Medicare.

The NYTimes also reports, however, that the current fee for services compensation scheme has not yet been structured so as to provide monetary incentives for such prophylactic care. The Times states: “While current insurance systems pay many thousands of dollars for hospital-based care, they cover only a fraction of the far less expensive care delivered by doctors and nurses that can keep patients out of the hospital,” and that experts say “a new model of care is needed.”
Read full article here.