Healthcare Managing Change
I consider the question of the managing change with the healthcare issues in a way of curtain problems and they’re solutions. First of all, let’s see some current issues in the USA health care system today. New diagnostic and treatment procedures flourish in the United States. Our medical schools are of the best, our physicians of the first rank. And why not, since we spend some 15 percent of our GDP on health care? Few would argue that there’s a better place to get sick than in the United States if you can penetrate the system. Our system is the problem, and it’s only going to get worse. At dinner party, if you listen to people on the subway, if you talk with physicians, and if you talk with leaders of small business and big business, they’re all very unhappy and confused. Private insurance companies are happy about current trends, if not happy about where we are. In the present, they’re making money. Drug companies were happier six months ago. They think they’ve been taken aback by the bad press that they’ve been getting, and they’re searching for how they can do better. But by and large, until relatively recently, I think they were feeling again comfortable. The more-affluent people that are also fully insured. While they grouse about the paperwork, they have reasonable ways of accessing the tremendous advances that have taken place in the biomedical sciences, which are increasingly translated into better diagnostic care, therapy, drugs. I use the word “access” advisedly, because it isn’t always easy for them either to get to the right places because of the bureaucratic constraints, because of the third-party payers who say you’ve got to have your primary-care physician refer you before you can see a specialist. But when they do gain access to the system, this group feels reasonably satisfied.
National medical errors database hits one million records milestone. Medmarkx, nongovernmental database of medication errors, has received over one million medication error records to date, the U.S. Pharmacopoeia (USP) announced recently. Medmarx is an anonymous, Internet-based program used by hospitals and other healthcare organizations to report track and analyze medication errors. Since the program began in 1998, more than 900 HCOs have contributed data to use an historical review of Medmarx data reveals that approximately 46 percent of the medication errors reported reached the patient; 98 percent of the reported errors did not result in harm. JCAHO Creates IT Panel. The Joint Commission on Accreditation of Healthcare Organizations has created an advisory panel to recommend ways the Oakbrook Terrace, Ill.-based organization can use its accreditation process to increase the role of IT in healthcare. The panel will conduct a benchmark survey on the existing state of IT adoption in healthcare, and track progress annually. The 39-member panel, chaired by William Jessee, M.D., president and CEO of MGMA, includes provider representatives and reps from health insurers, academia, think tanks, IT vendors and government agencies.
The Council of Smaller Enterprises is putting its considerable weight behind a push by the National Small Business Association for health care reform on a national level. The National Small Business Association, of which COSE is a member, has developed three ideas it plans to take to the federal government as ways to reform the ailing health care system, said William Lindsay III, immediate past chairman of the association, during a recent visit to Cleveland. Those ideas are fair sharing of costs, empowering and focusing on the individual, and reducing costs while improving quality. “The fundamental problem in America is the cost of health care and the cost of insurance,” he said. “We’ve got to get everybody insured.” The Washington, D.C.-based association already has begun to lobby lawmakers to adopt the three basic principles, and they’ve been receptive so far, Mr. Lindsay said. For its part, COSE soon will lobby Ohio lawmakers on the same issues, said COSE president Jeanne Coughlin. Under the association’s proposal, all Americans would be required to obtain basic health care coverage, a package that would be designed and mandated by the federal government, Mr. Lindsay said. The basic package would cost the same for anyone in a given market, regardless of their health condition, he said. For that proposal to work, insurance companies would need to accept everyone into one insurance pool, which would spread costs broadly and reduce uncompensated care, Mr. Lindsay said. If companies provide health care coverage above the basic federal level, they would need to pay taxes on the money spent on those benefits, he said. Those additional tax dollars then would be set aside for health insurance subsidies for people who don’t qualify for Medicaid but can’t afford their own insurance.
It is ironic that Mrs. Jeannie Lacombe received so much attention after her death; she didn’t receive much of it immediately beforehand. On the morning of February 1, the Montrealer suffered chest pains and went to the nearest hospital emergency room. Four hours later, a physician finally looked at the 66-year-old woman, who lay on a stretcher in the hallway. She was dead. On that early February morning, Maisonneuve-Rosemont Hospital was crowded with 63 patients in a ward designed for 34. Only three of Montreal’s 24 emergency rooms were not overflowing with double or triple their capacity. The problem isn’t confined to Montreal. Two weeks later, in Toronto, a five-year-old boy died in an ER five hours after arriving, without having seen a physician. At times this February, Toronto nurses have fought with ambulance attendants over the stretchers patients were brought in on. A Toronto Ambulance official commented last week that the hospitals have been refusing ambulance patients more often, and for longer periods, than at any time in the last 27 years. In Winnipeg, hospitals have been routinely on “redirect,” meaning that they accept only critical patients, and “critical care bypass,” meaning they are too crowded even for those. In Calgary, a physician arrived for work at Rocky View Hospital one day to find emergency patients lined up in the parking lot. The ER and the foyer were already filled. “I have never seen anything like that in all the years I have been practising,” he says. Calgary’s regional health authority openly contemplated cancelling all elective surgeries, and near month’s end, health officials in Edmonton did so. Somehow, in the “best healthcare system in the world,” patients are waiting hours to be examined. The sickest lie on stretchers for days, awaiting admission. Some argue that a combination of winter storms and flu have placed an unusually great strain on the system. These two factors surely contributed, but how did Medicare erode to the point where minor stresses can wreak such havoc? And is ER overcrowding such an isolated phenomenon? Last year at this time, with neither flu nor ice storm, Montreal’s emergency wards were filled to 155% capacity. And the problems with Canada’s emergency rooms are only the tip of the iceberg. In truth, Medicare has been languishing for years. Consider the plight of Jim Cullen of Winnipeg. Mr. Cullen has a potentially life-threatening abdominal aneurysm. He could bleed to death without warning unless the aneurysm is surgically repaired. Mr. Cullen has waited five long months for that surgery. Despite his optimism, he wonders every day: “How long will that (artery) wall hold out?” But because of the ER crisis, Mr. Cullen’s surgery is on hold indefinitely. Once Canada’s pride and joy, Medicare is marked by long waiting lists for life-saving surgeries, inaccessible diagnostic equipment, dwindling standards of hospital care, and an exodus of good physicians. Meanwhile, Canada’s population is aging. Over the next 40 years, the percentage of senior citizens will double. More seniors require more services; if we can’t meet today’s demand, how will we meet tomorrow’s? To improve Medicare, Canadians must first answer one question: what ails the system? Some-opposition politicians, professional associations, and public-sector unions-argue that the system is simply under funded. Others-cabinet ministers, economists, and policy experts-maintain that the system has enough money: we just have to spend it better through greater government control. If Medicare is under funded, people should pay more into the system. But according to a study by the Fraser Institute, working Canadians already spend 21 cents of every dollar they earn paying for Medicare. How much more do we need to spend? How much higher must taxes rise? The aging of the baby boomers will almost certainly bankrupt us: the Canadian Actuarial Society estimates that taxes will need to rise to an average of 94% of income in the next 40 years to sustain the system.
If greater control is needed, governments must take a larger role in the healthcare system. This has been the trend over the past two decades, but has any government ever managed to browbeat part of the economy into efficiency? Governments are increasingly involved in hospital decision-making, but if Moscow central planning didn’t work in Moscow, what makes us think it will work in Victoria, Edmonton or Toronto? When healthcare is “free,” people do not hesitate to use the system. They request too many tests. They stay in hospitals too long. They consult too many physicians. The costs add up. Millions of Canadians suffer from problems such as insomnia, back pain, chronic fatigue, severe headaches, and arthritis: there is a great potential for them to spend vast resources to little proven benefit. In 1977, a joint Ontario government-medical association committee reviewed patients’ use of the system and concluded that “demand for medical care appears infinite.” Canadians assume that in a “free” system there are no tough decisions to be made. If the doctor suggests that you need an X-ray, you get one. But while you don’t need to think about the cost of the X-ray, the folks at the Ministry of Health do. You don’t worry about the cost of visiting walk-in clinics, or lengthy hospital stays, but these costs still add up. According to the Ontario Task Force on the Use and Provision of Medical Services, Ontario physicians billed $200 million in 1990 alone for “treating” the common cold.
In Canada, the provinces have achieved cost control by restricting access to health services. They have downsized medical schools, restricted access to specialists, and reduced the availability of diagnostic equipment. In many ways, Canada has opted for the old Soviet method of rationing-everything is free, and nothing is readily available. And so Canadians must line up for tests. For surgery. For the basic healthcare they need. Provinces have been busily “reforming” health care, but what are the long-term results? Patients are discharged earlier from hospitals, often too early. Patients wait for treatment; some develop complications. Hospital beds are closed, reducing doctors’ ability to admit patients. All these factors played a role in the ER crisis this February. To make matters worse, bureaucrats have developed elaborate spending controls, reducing the system’s ability to react. Canadians have assumed that if we make health care “free” (and pay the consequent high taxes), no one will ever need to worry about getting quality care when they need it. It seems that this assumption is false. Making health care “free” means everyone must worry about getting quality care. And yet the so-called experts continue to try to make Medicare work-against the odds, against human nature. This dooms us to longer waiting lists and more horror stories.
Isn’t it time we had a meaningful public discussion about health care? Lives are at stake.
Most Americans are insured through their jobs. Employers used to buy the insurance from a third party, typically the local Blue Cross/Blue Shield not-for-profit plan. Recently the Blues have lost ground to more aggressive for-profit insurers. But their strongest competitor is now employers themselves, stung by rising health-care costs and the state authorities’ burdensome regulation of the insurance industry. Federal law allows employers who “self-insure” (usually through an arm’s-length intermediary) to escape state regulation. Over half of America’s biggest employers have now made the switch, in effect paying their workers’ medical bills themselves. The other main insurer in America is the government. The old and the disabled are covered by a federal programme, Medicare. Medicare, which will spend about $110 billion this year roughly twice the cost of Britain’s NHS , is divided into two parts: the first pays for most hospital care out of payroll taxes; the second pays for doctors’ fees out of general taxation and a premium paid by the patient. Medicaid, a state-federal programme that will cost nearly $90 billion this year, pays all the medical bills of the poor, including those for long-term care. Retired and serving soldiers are covered by the Veterans’ Administration, which has a network of inefficient hospitals, and by a special programme with the colourful acronym champus. This patchwork quilt (see chart 4 on next page) has two gaping holes. One is that it leaves a large and growing number of people currently around 35m without any insurance at all. The plight of the uninsured is bad, but not as bad as it sounds: most get care from hospitals that are, in theory, not allowed to turn anyone away. Figures from the census bureau and the American Hospital Association suggest that overall spending on the uninsured is comparable to spending on the insured, though it is unevenly distributed. Uninsured people can be bankrupted by big medical bills. And the bills they cannot or will not pay are a time-bomb passed among others involved in the system. The hospitals try to pass it to the insured in higher premiums; insurers try to pass it back in lower hospital profits, or to offload it on to state and local governments. The other flaw in the American way is caused by costs that are spinning out of control. At over $600 billion, the cost of health care in America now absorbs 12% of GDP. And whereas in other countries it has roughly stabilised, in America the share has been rising throughout the 1980s. Employers have reacted by trimming the health benefits they offer, especially undertakings to cover staff who have retired. Those undertakings will knock a $200 billion hole in profits when they have to be shown in company accounts from next year. One result is that in four-fifths of labour disputes in the past two years, the main fight has been over health benefits.
Foreigners like to blame the tribulations of American health care on excessive reliance on the free market. In fact, government policy has played a big part. Instead of improving equity, well-intentioned state regulation of the insurance market has made insurance all but impossible for small employers to buy. Two-thirds of the uninsured work, many for employers who would like to offer insurance if they could find it. The other third ought to have Medicaid cover, but budget cuts and a diversion of cash into long-term care for poor, old people mean that the programme now covers only 40% of those below the federal poverty line. As for costs of treatment, the biggest source of inflation has been reliance on expensive fee for-service medicine that gives doctors and hospitals an incentive to treat people in the most expensive possible ways. This might look like a market fault. But another prime contributor is the government’s decision to exempt employer-paid insurance premiums from federal and state income taxes amounting to an annual subsidy of nearly $60 billion. It is bad enough that this subsidy is biased to the better-off; worse, it destroys any incentive for employees to choose cheaper insurance. The government is also partly to blame for a legal system that has produced astronomical awards to patients in malpractice suits. These feed straight into the costs of health care through malpractice insurance taken out by doctors. High premiums and the fear of being sued have also made some types of care hard to get (try finding an obstetrician in Florida to deliver a baby). Even more expensively, they encourage doctors to practise defensive medicine such as ordering unnecessary tests.
Not everything about American health care is bad. Its quality is widely thought to be high which is why one opinion poll had 90% of respondents favouring “major changes” in the system, but over half satisfied with their own care. There is plenty of choice of doctors and hospitals: European indifference to patients is rare in America. America has made the biggest progress in developing quality assessment and output measures for health. It remains the world leader in innovation, experiment and new technology, both in medical care and in different ways of delivering and paying for it.
In 1915 a labour pressure group looked forward to national health insurance as the “next great step in social legislation”. Truman tried and failed to introduce it in 1948. In the mid-1960s Johnson managed to push through Medicare and Medicaid. Richard Nixon encouraged the spread of HMOS (in which patients pay a fixed fee to cover all their health care) and managed care. But when he suggested a national health programme based on a mandate for employers to provide health insurance for their workers, it died partly because Democrats like Edward Kennedy wanted government insurance instead. Ironically Senator Kennedy now supports something like the Nixon plan, but it is opposed by George Bush. There is a host of other ideas on offer: Insurance reform. Some want to ban “experience rating” (skimming the cream of insurance risks) and insist on community rating. Others want to encourage the small-employer insurance market, perhaps by pooling risks. A third idea is an “all-payer” system such as Maryland’s, under which all insurers agree to pay the same price to hospitals an attempt to create the monophony power among purchasers that is common in most other countries. But the insurance market already suffers from too much regulation. And an all-payer system could stop the move towards cheaper selective contracts with providers. Medicaid expansion to cover more of the uninsured. This might include letting people above the poverty line, but who cannot otherwise find insurance, buy into the public programme. An alternative is to expand Medicare to cover the whole population. But in deficit-ridden, taxophobic America, neither the federal nor any state government is in a position to take on a new spending commitment that could add up to $250 billion a year (even if it saves more in private spending). State governors have repeatedly asked Congress to stop expanding the coverage of Medicaid. Price and volume controls. The most successful of these has been Medicare’s prospective budgeting for hospitals, where payments are based not on the costs incurred but on fixed prices per case (known in the jargon as diagnosis-related groups, or DRGS). This has been copied by many private insurers. The average patient now stays in hospital for a shorter period in America than in any other country, and a recent Rand Corporation study confirmed that the quality of patient care has not been affected. A new set of Medicare price and volume controls on doctors comes into force next year. But though such controls might hold down spending in one place, bills have a nasty habit of popping up somewhere else as providers fight to maintain incomes. Alain Enthoven of Stanford University has put forward the most sophisticated single reform plan. TO encourage managed care (of which more below) he would cap the tax exemption for health insurance at the cheapest insurance policy available. He would create state insurance pools under healthcare “sponsors” for those who cannot get coverage. Employers who did not give their workers insurance would have to contribute to a state pool an idea known as “play-or-pay”. Congress’s Pepper commission, which reported in 1990, also wanted a play-or-pay plan. But such employer mandates would increase business costs, and without firm cost controls they might lead to more overall spend on health care. Individual mandates. The Heritage Foundation, a right-wing think-tank based in Washington, DC, is touting a plan that would replace the employee-tax exemption by a tax credit to help people buy their own health insurance. The government would require everyone to take out “catastrophic” health insurance a long-stop protection against the biggest medical bills. Potting the burden on individuals sounds attractive, but it would make it harder to avoid adverse selection by both insurer and insured. As a variant, a government commission headed by Deborah Steelman has been considering replacing both Medicare and Medicaid with catastrophic coverage for all. More patient charges or what are known in the jargon as “co-payments”. But these are already high, in both the private and the public sectors (on some estimates, old people now pay as much out of their own pockets for health care as they did before Medicare). And if they are pushed too far, people simply take out extra private insurance. Managed care in HMOS or PPOS (preferred-provider organisations that offer more choice of doctor and hospital than most HMOS). This still looks the most promising option. About 70m Americans now belong to a managed-care plan. Some plans do little more than insist on second opinions before surgery. But the best of them offer patients all the care they need for an annual prepayment, reversing fee-for-service medicine’s incentive to excessive treatment. HMOS have been touted as the answer for American health care since Paul Ellwood, a health economist, coined the phrase in 1972. But after a one-off cut in costs, their spending growth has since matched the inflation of the fee for-service sector. Many HMOS have lost money; some have gone bust. No wonder Bob Evans of the University of British Columbia says that “HMOS are the future; always have been and always will be.”
Is America ready to make any changes to its chaotic system at all? One day, it must: the uninsured are a growing embarrassment; spending cannot rise for ever; growing paperwork will become intolerable; increasing interference in doctors’ clinical judgments will provoke revolt. But the short-term prospects for reform are poor. The White House appears to think that any change would be politically riskier than letting the system bumble along as it is. As for the Democrat-controlled Congress, it was badly burnt when it expanded Medicare to cover catastrophic health-care costs in 1988, only to be forced to retract it in 1989 when the better-off elderly objected to paying extra taxes. In recent months the Democrats, especially in the Senate, have gingerly begun to discuss changes in health care. Some hope to make a version of national health insurance a big issue in the 1992 election campaign. The biggest problem for Republicans and Democrats alike is the mulish conservatism of America’s powerful interest groups. John Ring, president of the American Medical Association, says his organisation is firmly against national health insurance, or any plan that involves a single payer. (It might horrors reduce doctors’ incomes from their present average of $150,000 a year.) Insurers and private hospitals similarly guard against invasion by “socialised medicine” especially of the iniquitous British variety.
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Andrew Sandon
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