Wednesday, February 25, 2009

Obama's wide-based strategy

It seems clear that Obama has chosen to go after a whole lot of things at one time. With the economy he had to - stimulus plus making credit available by fixing the banks. Can't help that.

But he's also going after health in a big way, and will go after energy strongly, and probably education, too. Does all this make sense as a strategy?

I think so. "A crisis is a terrible thing to waste" has become a cliche - I wish I had come up with it. With the political tectonic plates moving (I think that's original, or original enough) you can get away with moving a lot of things forward. So it's acceptable to people to look at a lot of things and say, yeah, let's change it. Nothing has happened for such a long time (see Arthur Schlesinger on Cycles in American History), so we're ready just on that basis, like a volcano erupting through the moving tectonic plate. So we're ready on a time basis.

But on a trading basis, doing a whole lot at once makes wide trading possible. That means that you can do health and push the Republicans, but at the same time make a trade off in education with charter schools. And you can have so much going on with the banks that no opposition can really coalesce. Of course I could be wrong, and what could really happen is that disgruntlement on all sides can coalesce.

But I'm optimistic. Don't like being taxed more, however, to fund health care, which is the proposal - no tax deductions with more than 28% tax as the basis instead of the 39% which seems where we will be. Still, optimistic.

Budd Shenkin

Monday, February 16, 2009

Health Stimulus Plan, CHC's, Obama Health Reform

Here is an interchange on our SOAPM listserve (Section on Administration and Practice Management, of the American Academy of Pediatrics). We saw the stimulus bill has $2 B for Community Health Centers. I react, sarcastically. A doctor on the listserve says, hey, how do you like your Obama now? I say, I think he'll be a great president, but he is hemmed in by current plans and knowledge within health.

What I didn't go into was the seminal book by Robert Alford in the 1970's, well reviewed by yours truly, which said that the health care world was passing from the world of professional dominance to corporate dominance. This is the background for all that is happening. See especially my ongoing comments on hospitals - corporations, of course.

Also of interest is the intellectual migration of one B. Shenkin, who in his book, Health Care for Migrant Workers, Policies and Politics, advocated Community Health Centers as a solution.

Here's the interchange:

>>OK, a set-up question.

This is a time when there is a perfect storm of negative factors for the economy. Rational behavior of every private person is to save, and the great paradox of savings is, if everyone does what's rational here, there is ever decreasing demand in the economy, fewer jobs, dropping prices, even less investment, even less demand - it's not a pretty picture. So, classic Keynesian dictum is that only the government is left to put demand into the economy. The government has to do it, so people have jobs, so money can be spent, and the economy emerges from a downward spiral.

The problem with public spending is, what will the money be spent on? Some say that private choices are better choices, and for some things, they are. But the classic Galbraithian view (from the 1950's and 60's) is that public investment, very appropriate for some enterprises, is underdone in the United States. So, in general, I'd say the government has to spend and spend big, and the challenge is to find what is good to spend on.

The latter is the biggest problem. Classic liberals in Congress are loathe to examine the programs they traditionally favor, and change or eliminate them; they are loathe to appreciate that a program that succeeds on small scale might not work on a larger scale. That's the hurdle Obama faces - he has said, let's examine and adjust, but dealing with the old bulls in the House does not lend itself to discretion.

So, how should we spend public money in health care? There is no clarity here. Obama and his team look for ideas. His chief health advisor is apparently David Cutler, an economist from MIT. I don't know this guy or his work, unfortunately, but he is apparently mainstream. Mainstream now means what? Favor large organizations, favor technology (EMR's), favor organized programs. Don't put money into the private system because so much money is wasted there (which is true.) They know that reform takes a long time and it's not clear to them how to reform. They are loathe to attack the real problem children in the system, the stakeholders, because they are so powerful - the insurance companies and hospitals.

So, where do they put their money? The lobby for the CHC's are loud and powerful, and there is no opposition. There is no one from organized medicine to say, "Hey, those CHC's aren't really the answer! What about just funding primary care, and here's how to do it." There is no one there pointing the way, and the AMA is not a believable source for this question. So money goes there.

There are many loud and convincing forces supporting EMR's, and as far as I can tell, not many naysayers pointing out the problems of lack of uniform standards, etc. Everyone knows that cost is a barrier, so they figure let's put money there and cost won't be a problem anymore. We'll see how it gets distributed, but I'm not optimistic.

So, in the end, I think the Democrats are doing exactly the right thing in spending money to try to ameliorate a terrible cyclical low. The prospect of a depression is not pretty. The problem to my mind is the problem of the medical system, and the lack of a credible way of improving what is clearly a terribly wasteful system. No credible source gives a good idea of how change can come, aside from building bigger institutions.

On Sun, Feb 15, 2009 at 5:17 PM, Jonathan Caine <> wrote:

So how do you like the "change" in Washington so far? You've just been Obamafied and Pelosied. You better get used to this feeling because we've got at least 3 years and 49 weeks more of this.

BTW, did you notice that the administration is no longer are talking about "creating" jobs, but "saving" jobs. Funny thing. All of the jobs to be saved are in the public sector, however. The private sector will just have to wait.

Jon Caine MD

On Feb 15, 2009, bshenkin@GMAIL.COM wrote:

Notice also that $2 billion goes for Community Health Centers. I'm pleased to see that it has been thus recognized that care for the poor comes primarily through clinics for the poor, and not through the mainstream of medicine. Two different systems of care, long outlawed in schools, is being further ensconced in health care. Separate facilities, separate appropriations, separate systems. Separate accommodations. And I believed it has been shown in study after study that CHC's are the very embodiment of efficiency, and none are paternalistic - oh, wait, there was that recent study in Pediatrics that showed that patients do not complete referrals to community resources because of that. Never mind!

Since all doctors are rich, it would be foolish to consider that they might also serve the poor, and foolish to think that they cannot enhance their own facilities because of poor Medicaid payments. In fact, don't most doctors make about $1.2 billion, each and every one? Aren't primary care doctors the source of the malfunctioning of our health care system? That was my understanding.

I'm just wondering if fancy new buildings, ever increasing salaries for personnel at the CHC's, etc., will finally lure patients who have a real choice? You just never know.

One thing we do know - the lobbyists for the CHC's beat the pants off of our lobbyists. Wonder where they got the money?

Budd Shenkin
Bayside Medical Group
Oakland, CA<<

Sunday, February 8, 2009

Health Care Reform (2) - Hospital Culture

Well, we’re back to discussing health care reform. I was so wise in choosing the health care system as something to become interested in, back in the 1960’s! It’s an interest to last a lifetime. (Ironic comment.)

On April 3, 2008, an article was published by my old friend Jim Mongan and colleagues in the New England Journal of Medicine, called Options for Slowing the Growth of Health Care Costs. On July 24 the NEJM published my letter:

To the Editor: The limitation of the article by Mongan et al. (April 3 issue)1 on options for slowing the growth of health care costs is the acceptance only of reforms that will not irritate powerful, entrenched corporate and labor interests. Our system is costing us perhaps twice as much as it should. We need to target the fattest cats and slim them down. Hospitals currently seek consolidation rather than efficiencies, charge a fortune for routine services, and pay higher wages rather than taking strikes. Insurance companies add so little at so high a charge. Pharmaceutical companies advertise, develop frivolously repetitive drugs, and charge without restraint. Medical specialists in some areas operate and serve dying patients with little restraint.

The interventions suggested in the article are popguns against a profit-bound army. Restraint in our mixed system needs to come from government, not voluntary acts by corporations.2 Schlesinger3 has identified a cycle of government activism at 30 years, the last peak being 40 years ago. It is possible, then, that suggestions that are more challenging to entrenched interests should be entertained.

So, I guess that’s pretty clear.

This post is about the hospital part of health care reform. Unfortunately, I don’t have a solution. I have to admit that. But at least let’s recognize where the problem is. Hospitals take 35% of the health care dollar, and if they are not reined in and redirected, it’s not clear to me how health care can really be reformed.

Here is just a vignette from my life that is not the heart of the problem, but is reflective of it.

Two weeks ago I attended a Board Meeting of a little group of doctors called Children First Medical Group, which is an Independent Physicians Organization (IPA) that contracts on behalf of these pediatric doctors solely for Medicaid contracts.

During the first part of the meeting we heard that the group’s financial situation is declining. Compared to last year, our revenues will decline by 10% perhaps, and our expenses are forecasted to increase by 5-10%. No one seemed very concerned about this as it was presented, there was no action plan, and no one said anything from the group except me. What that illustrates is that physicians, who are on the Board, are not business people, and that the staff might not be so intent on business either.

But then at the end of the meeting, the President of the Board, an anesthesiologist, dismissed the staff so we could have an executive session. He then said that the contracting committee had met, chaired by him, and they were recommending a 30-40% increase for the COO, and a salary for our Chief Medical Officer of $240,000 plus benefits for “at least 1000 hours of work a year.” His defense of these increases were that they had done an excellent job (true), that the ongoing automatization will reduce FTE’s by two, and that in former years we had paid more for these functions.

He always said, and this is the point I want to highlight, that he himself had recently been made director of a hospital-sponsored surgery center, and he himself would not take less than $400,000 for the CMO job.

He then called for an immediate vote even though there was little haste necessary and railroaded it through.

The similarity to what happened on Wall Street is very obvious. How this man can emulate a dying culture (hopefully) at this time is astonishing.

But here’s the point. Look at how hospital corporate culture operates! Arrogant and not too bright. He acts just like most hospital managers. Indeed, as an anesthesiologist, just like the hospitals, he is used to have a monopolistic situation and pushing it for all it is worth – this is what anesthesiologists do with health plans. If health plans want to cover a hospital, they need to have the anesthesiologists serving their patients, and single groups of anesthesiologists have exclusive contracts with the hospitals. This is SOP for hospitals in a community as they consolidate with each other. Hospitals are price-givers, no price-takers, and ditto for anesthesiologists.

The anesthesiologist is getting paid a very high salary for his Directorship, all the while continuing "full time" as a clinician. He is thus part of the hospital culture. The hospital officials pay themselves very well. After all, it's Other People's Money (OPM). Even though this hospital is losing money, has just gone to the state for bond money, raises money from the Foundation charity each year - they still pay themselves very well.

And they use the same arguments as Wall Street. Our COO and CMO are not going anywhere, and not threatening to do so. But the Compensation Committee says, "We don't want to lose them. And compared to others in the field (just where the comparisons come from is not specified), they are underpaid, he claims. Right! Does it sound familiar?

So, when health care organization experts talk about health care reform, this culture and practice is what they have to address. They can talk about electronic medical records, they can talk about increased efficiency, they can talk about reforms that gore no one’s ox. But all the reforms in the world won’t work where the culture and custom tells everyone to act this way.

This is a very impressionistic and perhaps not very convincing post. In posts to come, I will probably be able to point to excessive salaries – the very ordinary CEO of a local non-profit hospital is making more than $800,000 as we speak; hospitals recruit very ordinary employees from our offices to make 30% more plus benefits, with no discernible reason. They order medical devices without even knowing how much the cost is, and without trying to get a favorable deal. Believe me, it’s a morass.

So talk about efficiency reforms, go ahead. It won’t make any difference. Heads have to be butted.

Budd Shenkin

Wednesday, February 4, 2009

Health Reform: The Problem with Hospitals

This post starts to approach a basic problem with health reform -- hospitals. This will be a recurrent theme, but let me start with an exchange with my beloved ultra Right Wing brother-in-law, Jim. Jim knows the public transportation area inside out, especially urban busing. He knows from this scene that private competing rather small companies can outdo larger, cumbersome, bureaucratic, and labor union infested companies with ease. I think he is right, and I might even give him a chance to express his views on this subject here in the future - to our expected and hoped for audience of 10 viewers.

Jim takes his experience and his belief in free markets and tries to apply it to the health care area, as so many do (Harvard Business School, especially.) So here is what he says:

Here's an authority you can believe in. The Pres. of a branch of the Aussie
medical assoc said "(The system) is basically broke and all health services are
in trouble." The most profound quote of all comes from Liberal health
spokeswoman Jillian Skinner: "The centralized control of hospitals means nobody
is accountable". Hospitals are run of the "state" of course.

She grasps the essence of a high cost, inferior system that is not
accountable to individual patients because an individual can never seek
redress from his or her government masters.

I vote Skinner takes Dashelle's place at HHS. Of course a true liberal
would be rejected by illiberal members of the majority party in Congress.

And by the way Austrialian healthcare is mixed between federal, state
governments and some private sector. Medicare, funded by the government of
course, covers all Aussies, reimburses visits to Doctors, with a fee
cap and covers all hospital costs. Its complex but a perfect window into
what is taking place in this country.

Shift as many people over to government medicare until the entire
system collapses when an even smaller number of
people pay for more of the costs the government
doesn't reimburse in the form of subsidies to each and every health care

The only winners will be the tens of thousands of new governmemt
bureaucrats developing ever more complex formulas to drive down "expenses"
as health care deficits soar, more taxes must
be conficated, while more hospitals close due to lack of funding and
Doctors rightly demand higher reimbursement fees from a bankrupt government.
Welcome to health care utopia.

OK, you get the drift of Jim's thought, using Australia. So, here is what I responded:

Jim, I think one of the very biggest problems in our health sector is the actions of hospitals, which are led very poorly, which have little incentive for efficiencies, and whose response has generally been to combine with one another and raise prices. One example cited by Jamie Robinson in the journal Health Affairs cites the cost of medical devices. If you look into it, the hospitals, which are the purchasers, do absolutely nothing to get good prices, but simply order the devices the doctors want - and make no effort to get the docs to agree on one device among themselves -- and they don't even know what prices they are paying. Just so irresponsible, but this is what they all do.

But as a very capital intensive industry, I'm really not sure how to structure it. I'd like to see competition, but that has never worked in the hospital sector. The government needs to play a role in structuring the hospital landscape so that competitive and responsible forces come to the fore. As things stand now, the hospitals are pretty much on their own, and they are real malefactors. (And, the managers pay themselves a shitload.)


I'm using this exchange, probably not too expertly, as a set up for a couple more posts. Watch for them!

Budd Shenkin