Sunday, September 23, 2012

Weekend must-read (2)



Leslie Michelson: Doctor to the 1% (and Maybe Someday to You), WSJ. Excellent discussion of how true healthcare innovation can only happen as the result of market-based incentives, and never from a top-down regulatory approach. Some excerpts:

In a world in which 98% of the conversations are about cost containment, it's a joy ... to have somebody who's focused on enhancing quality only.

... the health-care delivery system, to the extent it qualifies as a system, "has no quality control, no integration, no coordination." Doctors "tend to operate in an independent and isolated way, and even specialists who've been treating the same patient for years and years typically never, ever speak to one another."

Since businesses are the customers [in the current system], not the individuals who change jobs every three years on average, insurers "act rationally" and don't invest in services with "short-term costs and long-term payback." ... the better option is for businesses to convert to cash vouchers so their workers can buy portable policies. Right now, there is "no meaningful information about the quality of care, virtually no information about price, and no sensitivity to price," but that would change if the insurance industry built "an enduring relationship with consumers ... "

... why, circa 2012, should HR departments be selecting and administering one or two or three plans for a thousand or a hundred thousand workers and their dependents? You don't need a Ph.D. in economics to understand that you will guarantee suboptimization."

Universal coverage is never as universal as its proponents want it to be, and it usually results in a double- or triple-tier system as the upper-middle classes flee. Then the medical ethicists condemn the disparities based on ability to pay that their own programs helped to create.

... if your aspiration is to provide everyone the highest quality of care, then you have precluded yourself from providing anyone with the highest quality of care. As an economic, structural, societal matter, it's impossible to achieve.

"Innovations such as ours have to start at the high end, because you have to figure out how to do it. And then you figure out how to systemize it and take the costs down and deliver to the mass market."

Americans ... are "extremely good at buying things." But they don't know how to buy health care ... . "The entire engine of American consumerism is missing in health care. What a preposterous thing."

The last two sentences are the most powerful. And by the way, the guy who is doing this is a Democrat.

8 comments:

NormanB said...

My approach: Government (ie, the whole population) gives stipends to people to buy insurance. They set up Health Care Savings Accounts with a catastropic adjunct. People will then shop around for health care because they will pocket whatever savings they can wrangle out of the system.

What would have to be figured out is unravelling the tax deductions from health expenses either that individuals or companies get and also a system of how to deal with children. Medicare would be done the same way. Whatever seniors decided not to spend on would go to their heirs or charity of choice.

Everyone wins, here. The liberals get universal coverage. The conservatives get a market based system that will produce efficiencies. Why we can't meet on the middle for something like this is beyond my comprehension.

William said...

As a physician concerned about these issues and who shares articles about quality of care and best practices with like mined physician friends, I thought it was NOT a good article and mostly PR by a skilled salesman for the benefit of his private firm.

Just an example, you quote him correctly as saying "Right now, there is "no meaningful information about the quality of care, virtually no information about price...".

But in the article it is claimed: "So Mr. Michelson built a series of proprietary algorithms to distinguish "the few who are the very best" from "the many who are very good," based on "the factors that predict excellence."

I should think that it would be very difficult to build workable "algorithms" when there is "no meaningful information about the quality of care, virtually no information about price..."

The article is truly a lot of mumbo jumbo.

Scott Grannis said...

William: if the article had said there is "no easily available and meaningful information..." then your dismissal of its import would be incorrect.

The man's business is obviously providing value to his customers, and that value comes from extracting meaningful information from the market that is not easily or readily available to the average person.

William said...

Here's some mumbo jumbo for you to translate in terms of the capitalist, free market system that you admire:

"As the biomedical revolution took off," Mr. Michelson says, "there should have been a counterbalance of somebody taking the position of the general contractor, the manager, and investing in the systems, the technologies and the processes to keep up." But the organization of medicine as an industry didn't change.

What does that really mean? The US Government? Who is the somebody filling his criteria: "....general contractor, the manager, and investing in the systems, the technologies.."

Here is more non-sense: "For an era of targeted therapies, Private Health runs a full battery of molecular diagnostics "to sequence the entire three billion base pairs of somebody's DNA in a couple of hours," Mr. Michelson marvels. However only a tiny fraction of 1% of patients might benefit from this expense given today's technologies. Sound futuristic and advanced but almost totally worthless given where therapies are today.

AND: Private Health caters to "high net worth individuals" and to businesses that retain its services for their executives as a benefit. Mr. Michelson says he serves between 12,000 and 15,000 clients, "principally in private equity, hedge funds, professional and financial services firms."

More power to him, as an attorney and former Chief Executive Officer of the Prostate Cancer Foundation. But if you think catering to this tiny group of privileged Americans has anything to do with giving good care to a nation of 300+ million citizens you are sadly mistaken.

NormanB said...

William and Scott: Can you agree that if we had a system where each person decides for him/herself what medical care solutions he/she will pay for then the maximum efficiency will eventually be reached? Will this then reduce whoever's mumbo-jumbo we say now exists into noise?

Scott Grannis said...

NormanB: yes, of course

Unknown said...

The fallacy in letting people 'shop and buy medical' care is that there are not enough opportunities for people to learn how to do it.

I'm not talking about buying aspirin. We all have plenty of opportunities to buy aspirin. And we know what it is and what it is 'worth' to us. That does not explain why people will pay 2x for Bayer/Name brand aspirin vs. generic, but I digress.

If you are 55, and you are diagnosed with a serious disease, this is likely something that has never happened to you, and if you live will probably not happen again. You don't have the tools to be a good shopper in this case - your life is in danger, you don't have any idea of what the cost and benefit of the range of treatment options is. You are not going to bend the cost curve, you are going for a very scary ride and you are going to be winging it.

Repeat this scenario for end of life, where all of the really big over-spending happens. You don't really find many people have gone through the end-of-life process a few times - so they can get, you know, the hang of it. No time to learn which things are worth doing, so maybe next time you just don't make such a big deal, and let it go (die already).

We are stuck with needing experts to help, and doctors and drug companies are not necessarily un-biased or all-knowing. And to keep everyone honest, there should be a lot of institutional participation.

Having people parade around talking about 'death panels' to describe means that are being set up to identify cost-effective measures and systematize a disorganized system is grossly unhelpful.

Unless the 'death panels' are set up inside of insurance companies, well in that case it's just fine.

Joseph Constable said...

The article and Scotts response to comments allude to the problem. But it isn’t stated outright and the commenters so far miss the point.

The problem is that health care costs are too high. They will remain high and go higher as long as individuals can get someone else to pay for their health care. This means companies and unions may not provide insurance.

Additionally, it is necessary to eliminate the protections from competition that the government provides. It isn’t just the Federal government giving medical providers exemption from anti-trust, etc., local governments limit the number of MRIs and practices in their area based on “need”. Need turns out to be need for high profit for the doctors and practices.

The medical industry cartel is probable the best example of crony government there is.

That consumers who can buy cars, electronics, insurance other than medical, etc., can’t buy health insurance because they are ignorant is an ignorant statement.