The Physician and Cost

Don’t you just long for the good old days, the days when providers were called doctors, and their clients were patients; the days when Human Resources was still called Personnel and the days when a company could offer Blue Cross and Blue Shield and employees would be happy to have insurance and no one would ever think about the quality or cost of the health care they were getting? Were things really so bad then? The employees got their coverage when they were sick, and the management went down to the Greenbriar Clinic every year for their Executive Physicals, including barium enemas and Cardiac stress tests, and everyone was happy. Mothers stayed in the hospital three days after the baby was delivered, the doctor decided which shots to give the kids and when, the employer expected you to be out of work for six weeks after the baby was born, and the father would be expected to keep working. If you had cancer they would tell your family but not you about it while you were dying so as not to worry you. Tonsils were all out, and a week long stay in the hospital for high blood pressure or to diagnose an ulcer was routine. Most doctors were actually paid by their patients, and the patients had to contend with insurance reimbursement. Those were the good old days!

The great thing about the good old days is that we seemed to have had unlimited resources, and the bad thing was that the nice picture leaves out lots of people. For those with jobs and insurance or money, things were fine, and even for those without insurance, it seems that the doctor would accept a chicken in return for a house call, and free care was often provided.

Increasing technological advances during and after WWII contributed to the huge success of medicine as a force combatting many of the historical ills of individuals and society. In very rapid succession infectious diseases were “conquered “ one after another, surgery advanced, and amazing pharmaceuticals made life more bearable than ever. Medicine as an industry has been on an amazing and rapid growth curve for both cost and quality for the last 60 years and we haven’t looked back.

It was probably the increasing universal availability of coverage through insurance (1920s), and the creation of Medicare and Medicaid (1960s) that contributed most to the growth in doctors’ incomes and the growth in the cost and availability of new procedures. The cost went up without control because no one seemed to care what anything cost if it was for our health.

By many accounts, American medicine is the greatest medical establishment in the world. American medicine has been innovative and successful in developing the methods and tools to fight disease. Diseases have been conquered and life span expanded for millions. Our doctors have won Nobel prizes for advances in every field, and our scientific institutions lead the world in medical research in many fields.

Others would not agree with that analysis, or would temper it with a bit of reality: they might claim that the practice of medicine in America has failed the American people in many ways. It has failed to bring the promise of good health and longer life to millions of Americans. The poor and the uninsured lack access to the system that provides benefits to so many others. By many measures of quality, the United States is not the healthiest country on Earth. Our children die too often and too young, our life expectancy lags behind other developed countries, and we fail to immunize all of our children against preventable diseases.

Behind these arguments is an economic reality, accepted by everyone. The United States spends, by far, the most money per capita on health care for its citizens of any developed country. If we spend so much, one would expect us to have the best outcomes in the world, but we don’t. Therefore, the critics claim, the system has failed; it is inefficient and wasteful. They call for an overhaul of the system to reduce cost and improve quality. A “single payer” system is often suggested, such as that which exists in many countries, most notably, neighboring Canada, and so the argument goes on.

Today each individual patient wants the best care available regardless of costs (as long as they don’t have to pay) and physicians want to do everything possible (as long as they get paid) and our collective governments and employers (who pay the bills) want those things, too, but they also want to see some sort of responsible control over the costs of the system. Neither patients nor physicians are directly accountable for the cost of care - they don’t pay the bills. There is a disconnect between those who pay for the service and those who receive it which sets up a system without feedback that stimulates a continuing upward spiral of costs. The American medical system has made great accomplishments and holds the promise of even greater achievements in the future, but the incredible costs of care will eventually force government intervention which will threaten everything in it which doctors and patients hold dear.

To avert this catastrophe, for that is what it would be for everyone who is a part of the private health care system and our patients, physicians must find a way to factor cost control into everyday activities. After what looked like a good start in the 1980’s. HMOs failed to deliver on the promise to deliver quality health care at a lower cost. In the 1990s, the Clinton’s were thwarted by the insurance industry, and others, from introducing market forces into the system. A more managed care environment since then has given us hassled physicians, high malpractice premiums and double digit inflation in the cost of medical insurance.

In 2006, General Motors announced that it would be laying off 30,000 workers, primarily because of the burden of their health care and pension costs. Ford was doing the same. While market forces and management decisions may have contributed to their recent setbacks, there is no doubt that the cost of health care for employees and retirees is a major and ever increasing source of expense for Americas largest corporations. In addition, in state after state, budgets strain under the load of Medicaid costs that are out of control. My own property taxes have been going up regularly, and 50% of my county budget is devoted to paying the costs of a Medicaid program that can’t even pay a physician the cost of providing care to a patient. (Our local Blue Cross Blue Shield plan had to close medical clinics that it managed because it couldn’t afford to deliver care with the reimbursements that it was getting, even from itself). It is a crime that a billion dollar company like our local BC/BS couldn’t spend a few thousand dollars per year to keep a needed clinic open. Obviously it is better business to sell health insurance than to deliver health care. Even the federal budget, with its trillions of dollars, cannot continue to support a war on terror, respond to unexpected natural disasters and still assure medical care to every American.

Physicians have contributed significantly to this situation. While physicians services accounts for only a small proportion of the total cost of care, the decisions made by physicians affect almost every cost in the system for every patient. As long as physicians ignore the cost of care, and patients expect someone else to pay for it, costs of the system will be destined to spiral upward.

Physicians have been single-mindedly focused upon giving the best possible care to each patient, without regard to cost. This is not necessarily a bad thing, however, it has come to be considered almost unethical to even consider the cost of care in medical decision making. ‘Rationing’ is a dirty word in medical and political discourse, as is ‘cost control’. Medical Societies and the AMA have rushed to form committees and organizations dedicated to improving the quality of health care by every measure imaginable, yet there is no credible medical organization dedicated to cost control. Quality gurus tell us that improving quality will reduce cost, or at least make us more efficient, yet there has been limited success in demonstrating this outcome.

As doctors, the argument goes, we can’t advocate for cost control because it contradicts our oath. It is a part of our ethical duty to provide care according to the patient’s need and without regard to the patient’s ability to pay. That concept gets taken to an extreme when even the county, the state or the country we live in can’t afford the care that we provide!

Doctors are just plain afraid to talk about ways to reduce the cost of care. It is as though even talking about it will threaten the quality of patient care and the professionalism of medical practice. Yet every other industry thrives on discussions of cost.

Would the automobile industry be producing cars that give such incredible value without concerns about cost? Every engineer working on every aspect of every car has to think about the cost of every feature. The result is a product that has the best features at the best price. Competition between producers guarantees that everyone benefits by giving the most market share to the company that provides the best combination of cost and quality.

Would computers be twice as powerful and twice as fast every year at half the cost if no one cared about costs? My desktop computer today, an Apple G5, has lightning speed, enormous storage capacity, a crystal clear screen and great functionality for less than the cost of my first Apple computer in 1986.

Buyers care deeply about the price of their cars and their computers. For those with money, a particular purchase may be a sign of affluence. For the vast majority, a car is one of the two most expensive items they will ever buy, and they shop carefully. Price is important, and so are features. Fit and finish, customer satisfaction and performance are important. People who otherwise don’t deal with technology in other parts of their lives learn to talk about fuel efficiency and horsepower, acceleration and torque. Safety information is analyzed and published frequently. Can anyone imagine a health care system in which patients shopped with equal enthusiasm?

Health quality improvement experts have talked for years about making quality information available to the consumer. The trend has just started with the availability of information about big items like heart surgery survival and mortality statistics in some markets. New York is a leader in this trend and my local hospital benefits because of its excellent record.

Yet, medicine has NO discussion of cost. Patients don’t care about costs if insurance is paying the bill. Doctors don’t care about cost because insurance is paying the bill. Insurers have traditionally just passed along the cost of care to employers and the government. Even employers until very recently saw health insurance as a payment in lieu of salary, and unions negotiated it that way, so even employers didn’t care about costs until very recently.

The result is an inefficient system that is costly to begin with and growing out of control. Implementing what should have been an obvious and logical concern about the cost of health care now becomes a radical revolution which is threatening to everyone, especially patients who fear limits on the availability of care and physicians who fear that quality will suffer and their incomes will fall.

The failure to care about costs has infiltrated every aspect of health care - even the cost of equipment. Replacing the EKG machine that I bought to start my practice 14 years ago will cost me more than it did in 1993. It won’t have any more features than before, and it’s just a computer and a printer combined. Why is it so expensive? Electronic medical records systems are prohibitively costly, and in spite of all the money in the system, no one seems to be able to pay for it. The perception that there is a surplus of money in the system and the lack of accountability for costs - we’ll just pass them through to the payers - has taken the pressure off manufacturers of medical equipment. They charge more just because they can!

I am dedicated to the premise that it is possible for cost control to be a part of our health care system without adversely affecting quality of care, and that physicians can and must take an active role for it to succeed.

There are those who will immediately criticize this effort. I alluded to them earlier. Physicians who feel that any discussion of cost is out of bounds, unethical, fraught with danger or just plain bad for every one. Without even reading what I have written, they will call me communist or traitor or idiot or just plain “bad doctor”. I understand their concern.

However, I have been practicing medicine for almost 30 years. I spent 14 years working in and managing an HMO, trying to provide the best care to a group of enrolled patients while making money for a corporation that provided their insurance. Our physicians did a good job, but the inherent conflict of cost control and quality, and the need to keep the best doctors while being economical in salaries and service ultimately caught up with us. I left before the demise of the company to start my own private practice, to see if the principles of management and medical care delivery that I had learned would be useful in the context of a private practice. My business plan made the following promise to my patients:

Medical care is expensive. I will work with patients and payors to insure that they get the very best value for money spent on care which is provided or arranged by me or my staff.

For 14 years I have tried to live up to that promise and still give patients the best quality care that I could. For my practice, I defined quality very simply:

Everyone deserves quality medical care, but what is quality? Quality in this practice means that I give personal service to each individual and family with the same care and attention that I would give to a member of my own family.

Reviews of my practice by insurers and outside review organizations regularly show that medication costs are low, my patients experience fewer emergency room visits for chronic disease, and the overall cost of care is below average. United Health Care recently awarded my practice two stars for quality and efficiency. I have never been cited for giving poor quality care, and I have not been sued for malpractice since the first time in 1979, just a year after I started practice, while working in an HMO group practice. I have maintained my license with the state of New York and have achieved fellowship in the American College of Physicians. I could go on, but my credentials are available for anyone to review any time. (my web page is www.drsneider.yourmd.com)

My personal practice has shown that good quality medical care can be combined with a concern for cost without adversely affecting patient care.

A testimonial such as mine is not any real evidence, but there are other examples of cost management and quality medicine out there. The Group Health Cooperative of Puget Sound and Kaiser Permanente continue to be successful models for excellent quality care at a manageable cost, but they are struggling to succeed inside a system that fights them every step of the way. Some will immediately point to complaints about care from these organizations or financial problems they may be having. We must remember that these organizations exist in a society that has different standards. They are pounded daily by patient expectations and community standards that don’t include cost in the equation. Their very existence and continued success is a testimony to the commitment and innovation of their staff and leadership.

Even if California and northwest Washington State are able to sustain profitable HMOs like Kaiser and Group Health, the rest of the country is not. The inherent conflict between the physicians oath to help each individual patient and the economic imperative to control costs makes patients and employers uneasy. Demands for less restrictive policies and broader panels of physicians have made managed care plans or HMOs start to look like old fashioned indemnity plans - which no one can afford any longer. The adoption of some classic HMO management techniques by traditional insurers has further blurred the line between HMO and indemnity insurance. HMOs are trying to attract patients by offering the flexibility of an indemnity plan, and indemnity plans are trying to compete financially by adopting HMO management techniques. Both sides are failing to control the cost of health care as premiums go up by double digits every year in many communities.

How can physicians contribute to the control of health care costs, avoid a conflict of interest and still deliver quality care? There is a way out of this dilemma, and it involves a reordering of priorities to include cost control in all equations of care. Managing the cost of care should not be the primary goal for physicians, but it should be on the list of physician responsibilities. This is a change that is necessary. We must move discussions about cost from the list of taboos onto the list of considerations in every case.

This is a critical undertaking. We want to continue to advance the scientific basis of medical care and make it available to everyone, and in order to do this we must control the cost. But cost control cannot be the primary goal. Just as I believe that physicians must not participate in assisted suicide, because saving lives, not ending them is our goal, physicians should not be primarily engaged in cost savings activities that ultimately deny needed care to individuals.

In trying to understand this problem and propose some solutions, I hope to examine how medicine works as a business, the factors that contribute to the increase in medical costs, and the conflict between cost and quality that physicians face every day. Then we can try to understand HMO management techniques - just how do they attempt to control costs and do they even care about quality? Once we understand the driving forces behind the cost of care, physician’s conflict and the HMO/managed care approach, let’s look at specific examples cost and quality control in practice. We can review various models of health care delivery systems and their success at providing quality care and controlling cost. I want to look at specific problems that face us as we age or become ill, specifically intensive care, experimental programs and end of life care. How do Americans look at the value of life and longevity, the promise of medicine and the realities of end of life care? Finally, is there a model that can help us achieve high quality health care at a controlled cost? What would it look like, and is there any evidence of success; is there any hope for doctors or patients? We’ll see.