"Sickcare" and the drive to wellness.
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What do a physician and an autobody shop have in common? They're both in the business of fixing damage, not preventing damage. This analogy doesn't come from me, but a physician – Dr. Bill Hazel, who is also Virginia's Secretary of Health and Human Resources. Dr. Hazel used the term "sickcare" for the current state of health affairs: a system where, like the bodyshop, physicians have neither the incentive nor the training to advance wellness.
A self-described right-wing conservative, Dr. Hazel gave several examples at a recent gathering – the most poignant of which was about his mother who experienced 6 weeks' worth of pain and endless referrals to fix the cause of the first day's diagnosis: a bad gall bladder. (It reminded me partly of a friend who needed a cortisone shot for his ankle, only to be told to make another appointment and come back later for the procedure.)
In the United States we have effort-based healthcare: consumers of healthcare – individuals, employers, insurers – are charged based on the cost of the service, not the value of the service. The result is revenue maximization for the industry as a whole with ever increasing prices. There is no incentive for innovation, no incentive for cost savings.
Instead, we get price fixing by the federal government – a healthcare consumer that accounts for 50 percent of insured individuals through Medicare, Medicaid, and federal employees (including the military). Physicians accepting Medicare patients are reimbursed using a price setting scheme known as RBRVS or "resource-based relative value scale" that pays out based on effort, rather than outcome. (This approach is akin to "cost-plus" contracting which the government rarely uses today.)
Are doctors greedy? No – they're just hard-working, revenue maximizing Americans. As Dr. Hazel put it: "We've always done it this way."
The effects of "sickcare" are broad. High healthcare costs affect our international competitiveness. According to Dr. Hazel, the average insurance cost per person in Canada is $6,000 a year; in the United States, it's $8,000 a year. Expensive healthcare also affects access to care for low-income individuals and families. Sick kids are less receptive to learning, more likely to remain poor, and result in a workforce that is ill-prepared to compete with the best and brightest.
My frustration with the current debate is that there is insufficient focus on these effects – cost to consumers, cost to employers, and the impact on international competitiveness. Without this focus, there was a rush to create a new structure without fixing the current structure. The Patient Protection and Affordable Care Act (PPACA) – known widely as "Obamacare" even though the legislation was not authored by the President – does little to affect the cost of healthcare and is cited by the Congressional Budget Office as increasing the overall cost of healthcare to the nation.
So what's the fix for reducing healthcare costs? Dr. Hazel suggested that tort reform, information exchange, universal coverage, and risk pooling (or benefits exchanges) are all good innovations. But none pack the punch on rising healthcare costs as moving away from fee-for-service. In my position page "Healthcare: We're Not There Yet", I recommend repealing PPACA solely because it does so little to reduce cost.
The federal government needs to suspend paying for any care that's provided on a fee-for-service basis and drive toward integrated, managed care that pays for positive patient outcomes. As the biggest consumer of healthcare services, government needs to wield its buying power for the benefit of all consumers.