What medicine do you want: person or population?

Person medicine starts with you and your doctor discussing what is the best care for you. After considering long-term medical effects as well as financial costs, you and your provider decide what to do.

Population medicine means that some panel, committee, or group determines what they consider cost effective for a population. That could be an insurance company or a government agency. Medical care that is deemed  “cost effective” is authorized and therefore available for use.

Medical care adjudged not cost effective for the population is, well, not: not authorized, not paid for, and therefore not available for use in patients (other than some who might be connected enough to get waivers.) This is what is known as practicing medicine for the mean, the middle, or the system. Others call it rationing.

Population medicine is health care practiced by bureaucrats and administrators ostensibly for the welfare of a population.

By contrast, person medicine is health care practiced by doctors and nurses for the welfare of individual persons.

You choose: person medicine or population medicine. If you don’t choose, the choice will be made for you.

Universal health care countries such as Canada, Great Britain, and New Zealand overtly practice population medicine. The government claims that it knows best and decides what works and what does not. The former is approved and the latter is unavailable. Father knows best and decides what is best for the mythical average patient.

However, as Scientist Stephen Jay Gould personally proved by surviving “terminal” lung cancer for over twenty years, there is no ‘average’ patient. What is best for the average patient in a large statistical population is often not best for an individual person.

Providers do not treat mythical persons. They treat real people, with names, families and multiple responsibilities. In our culture, ethical standards for good health care require doing the best possible for each individual patient. In America, the patient knows best, not “Father” in the guise of government.

To see population medicine in action, check out the online article “If I lived in New Zealand, I’d be dead.” The author reports that she had an unusual form of breast cancer for which approved therapies in New Zealand (where she lived) did not work. A new but expensive anti-cancer drug – Herceptin – had shown great promise. Though her doctor and she wanted that drug, it was not approved by the government and therefore was not authorized for payment. Fortunately, she had the money to pay out-of-pocket for the Herceptin, did so, and lived to tell her tale. Most people would not have the money and would simply have died.

The U.S. currently has the worst of both worlds. In the popular mind, we have person medicine. However, in our system, the patient is disconnected from his or her money. There is also a strong element of population medicine. Both insurance companies and government agencies – i.e., Medicare and Medicaid – authorize (pay for) what is cheapest for them, not what is best for the patient. The result is a constant struggle between provider and payer, with the patient caught in the middle, bounced around like a pin ball, with no ability to decide one’s own care.

The ACA – the disingenuously titled Patient Protection and Affordable Health Care Act of 2010 – establishes an independent agency called I.P.A.B. or Independent Payment Advisory Board. IPAB will reviews all expensive medical therapies and decide which are deemed cost effective and which are not. “Not cost effective” treatments would become unavailable for use in Medicare and Medicaid patients. Even if there is good reason to believe one of those treatments is the best possible for you or your child, sorry Charlie!

IPAB was modeled after another disingenuously titled government agency with the acronym NICE (National Institute for Clinical Excellence) in Great Britain. Their population medicine-based “clinical excellence” produced age limits for certain treatments such as no kidney dialysis after age 55 and no heart surgery over age 65. These treatments are much more costly than Herceptin and beyond the financial reach of 99% of the population.

In Canada, even the 1% who might be rich enough to pay for such treatments cannot access them. Any attempt to use non-approved therapies, even if paid for by the patient, is severely punished.

So, back to the title question. Which do you want: person medicine or population medicine? If you choose not to choose, or fail to make your decision very obvious to your Representatives, you know what will happen.

System MD

We may want, even pray for, a quick, simple, painless answer to big, hard problems. Our brains know that will never happen. Still, we let our emotions dictate our expectations. So it was with Sarah van Gelder’s panegyric on Huffington Post for the single payer solution to healthcare.

Her article was filled with errors, magical thinking, and one truth whose implications escaped the author.

Van Gelder starts by saying healthcare has been in trouble ever since the Republicans convinced the Obama Administration to drop the public option [for health insurance]. Recall that in 2008-09, Democrats controlled both Houses of Congress and the White House. Had they wanted the public option in the Reform Bill, it would have been in.

Much more important is the egregious implication that healthcare wasn’t in trouble until the Republicans (sic) stopped the magical answer: single payer. Healthcare has been in deep trouble for over 45 years, ever since Congress broke open the “lockbox” for our cash contributions to Medicare. They took the money, spent it, and replaced it with IOUs. Ever since then, Medicare has been a Ponzi scheme, one that will collapse by 2017.

One truth in van Gelder’s article was the title of the graph: “We’re Not Getting Our Money’s Worth.” Worth is determined by the ratio of how much you expend for something compared to how much you get of something you want.

The U.S. is indeed spending much more than anyone else on the planet for healthcare (the system) and not getting the results we want from health care (the service). This is true for overall longevity, infant mortality, and for preventable as well as chronic illnesses. The question is why?

Why are we not getting enough of what we want? Why is the spending excessive? In other words, what are the root causes of the symptom over-spending?

Every good physician, apparently with the exception of van Gelder’s “group of 50 doctors,” knows that you treat causes of sickness, not the signs and symptoms, regardless of whether the ill patient is a human or a system.

Do you want to cure sick healthcare? Or do you want a quick fix, even though you know that fix is indeed a colloquial “fix,” a palliative. Palliation might make We-The-Patients temporarily feel better but in reality makes healthcare-the-patient sicker?

You don’t cure healthcare’s over-spending by spending an additional $1.76 trillion as does the ACA, or by repeatedly shouting the shibboleth single payer.

You cure over-spending by: a) defining which spending provides value (and therefore is not “over”); then b) defining which spending does not provide value (and therefore is “over”); and finally c) eliminating as much of (b) as you can.

Some polls show that Americans favor a single payer system. Others demur. There are three reasons why some may want single payer. First, healthcare is such a confusing mess that any answer touted as simple, straightforward and efficient is grasped quickly like a life vest. The fact that single payer is neither simple nor efficient does not deter our hopeful nature, which is the second reason some advocate single payer: magical thinking. Finally, some ideologues continue to advocate single payer while ignoring the evidence.

Evidence is another requirement for practicing good medicine. What is the hard evidence – not bombast or fantasy – about single payer?

Great Britain has its single payer NHS (National Health Service). Reeling from spending it cannot afford, NHS has begun to ration health care. That is what their N.I.C.E agency does and that is what the IPAB (Independent Payment Advisory Board) of the ACA will do here. Single payer means strict medical rationing by the government. Did van Gelder mention that?

Canada has a single payer system, which van Gelder likened to our Medicare. Our northern brethren, like Medicare patients here, are literally dying looking for a doctor or waiting in line for care.

In Canada as Medicare here, payments are so low that doctors cannot see the patients and stay in business. I especially enjoyed (please take as sardonic) van Gelder’s statement that doctors who care for Medicare patients are in “private practice.”

Private practice connotes rich doctors in their big black Mercedes, who charge huge fees and make lots of money. Well, doctors can charge whatever they want, but Medicare pays what it pays – take it or leave it. Before ACA, the payments were so low that doctors could not accept Medicare patients and still make payroll. What does ACA do to “save Medicare as we know it?” ACA cuts Medicare payments to doctors by an additional 21-27%! Now no provider can afford to see a Medicare patient.

For a single payer approach closer to home, consider Commonwealth Care (CC) in Massachusetts. Over half of Bay State doctors are leaving or refuse to see patients insured by CC because the payments, just like Medicare, are below their cost-of-staying-in-business. In Massachusetts, a patient covered by CC with a complaint like abdominal pain can wait over six weeks before seeing an internist, family practice physician or OB-Gyn doctor, assuming she or he can find one.

Never leave them on a low note, so say the pundits. What might be a high note? My answer is: we can cure healthcare. Don’t sedate, palliate, or mesmerize the patient with single payer. Don’t treat symptoms. Practice good medicine.

The root causes of over-spending are known. Cure the patient by excision – cut out the cancer of over-spending (and leave the good cells – the spending we want!)

System MD

March 23, 2012 marked the two-year anniversary of President Obama’s signing into law of the Patient Protection and Affordable Health Care Act (PPAHCA, shortened lately to ACA), pejoratively called Obamacare. On that day on local radio, I debated State Senator Dede Feldman (D-Albuquerque) about the ACA. During the discussion, an analogy came to me that can clarify the issues surrounding Congress’ self-styled, ill-conceived “reform” of U.S. healthcare via the ACA.

A patient, whose name is M. Healthcare, enters a doctor’s office with two chief complaints: 1) overspending – both individually and nationally – and 2) “cannot get health care.”

After hearing the patient’s complaints and without further ado, the doctor calls in three burly male nurses. They hold the patient down and the doctor forces a foul-tasting snake oil preparation into the patient’s mouth. During this procedure, the doctor loudly proclaims that this will cure the patient. “Trust me,” says the physician.

With the patient still restrained, the doctor takes the patient’s wallet, removes all the money, and garnishes the patient’s wages for the next twenty years. With beatific smiles, the nurses then release the patient, saying what they did was for the best.

Clearly these providers engaged in gross malpractice, just as Congress did with the ACA.

Our Congressional doctors-without-licenses made no attempt to determine the causes of patient Healthcare’s symptoms: over spending and no care. Where did all that money go? Do we really want it to go there? What are the reasons why the patient cannot get timely, high quality care when needed?

Doctors for humans are required to be evidence-based in their recommendations to the patients. They review past experience to see what worked, what did not, and why. Why didn’t Congress behave the same way before passing the ACA?

Had they done so, our Representatives would see people dying while waiting in line for approved care in Canada. They could observe British denial of care based on age. Closer to home, there is Massachusetts with Commonwealth Care, also called RomneyCare or Obamacare Lite. In the Bay State, a woman with pelvic pain must wait 6 weeks before she can see an ObGyn doctor. Over half of all doctors in Massachusetts do not accept Commonwealth Care patients because they cannot afford to: reimbursements are so low that the doctors go out of business.

A doctor is a fiduciary. The good doctor advises. The good doctor never forces his or her will on the patient. The malpracticing providers in the analogy above are also guilty of battery as well as stealing. With the ACA, Congress is guilty of all three: malpractice, battery and theft, plus indenturing our grandchildren. They do this because Washington is populated with magical thinkers who believe, Because I want it and because I mean well, everything will turn out just fine.

The alternative to a diagnosis of magical thinking by our Representatives is too hideous to contemplate. If they actually knew that ACA would be healthcare exacerbation (opposite of reform), they couldn’t have passed it. So it must be, it better be magical thinking.

Future indentured servitude is clear. Though the patient (Healthcare) came in complaining of overspending, the Congressional doctors with their ACA will spend an additional $1.76 trillion (latest GAO estimate.) These are dollars we do not have, and thus will be added to the deficit. This is a debt that must be paid back by our grandchildren.

During our debate, Senator Feldman regaled the audience with all of the new rules and regulations to protect the patients, to insure adequate coverage, to constrain rising costs, and to eliminate “inequality in healthcare,” (her words).

Take a step back. Think about the system and about you. What ACA does, what Congress has repeatedly done, is to add more and more complexity to an already incomprehensible, extremely inefficient, and user-unfriendly system. I am being kind with the word user-unfriendly. Healthcare and particularly its insurance component are actively user-hostile.

Always keep in mind the way healthcare financing is structured: they make profit (private insurance) or they stay within budget (government) by not spending money. For them, “success” is defined by not providing care.

The ACA diverts funds from care to management. The money collected by the government, in taxes, by the individual mandate (if upheld), and by penalties, will be given to bureaucrats and taken away from providers. Medicare reimbursements have been cut by the ACA over 20%. So, they take resources from care services for patients and give them to bureaucrats because of healthcare’s massive administrative complexity.

Most people believe that complexity cannot be avoided, that it is inevitable. It isn’t. Many people believe they don’t have to pay for administrative complexity. They (we) do, hugely. No one thinks that complexity hurts us. It does, in numerous ways.

Any operations expert will tell you the more complex a system is, the more inefficient (wasteful) it is. No wonder that the healthcare system consumes a trillion dollars a year that could (and should) be spent on health care but is not. That is real money – our money – that the government gives to itself, rather than spending it on We The Patients.

Complexity in healthcare is a measure of the failure of the designers, lawmakers, and policy experts to do what they should do: simplify healthcare.

• As complexity escalates, the system is more prone to errors.
• As complexity increases, opportunities for fraud and embezzlement multiply.
• As complexity increases, the system becomes less sensitive to the individual.
• As complexity increases, costs explode (just like they are doing). And the solution that the government uses to combat this is…increased complexity (even more rules and regulations)!

Do you see a pattern here? I certainly do.

Amidst all the political maneuvering, the convoluted legal arguments, and a nation focused on gamesmanship, let’s keep poor, sick Healthcare in mind.  The patient’s overspending has gotten much, much worse. As for difficulty findings medical care, there are no doctors or nurses and hospitals are going out of business.

So much for Washington’s “reform” of healthcare.

Whether you are fixated on newspapers, addicted to radio, or mesmerized by TV, you get the same clear, unambiguous message: what we want healthcare to do is to cut costs.

• “Medicare Demos [Demonstration Projects] Fall Short On Savings”
• “Top Ten Reasons for Healthcare Spending”
• “Cutting Costs Doesn’t Cut Costs“
• “To Reduce Military Spending: Cut Benefits Or Cut Armor”
• “ACOs – A Promise Unfulfilled”
• “Pelosi Assures That ACA Will Cut Deficit”
• “Healthcare Spending Is Out Of Control“

It appears that the purpose of our healthcare system – its raison d’etre – is to avoid spending money. Of course that is crazy, but overspending and cost cutting is all we ever talk about or hear.

Why do we have a healthcare system at all? What is its raison d’être –  French for reason for existence?

A system is a way to organize objects, people, and tasks.  A healthcare system organizes nurses, drug reps, hospital managers, and regulators in order to do…what? What is its raison d’etre? Before you answer the question, remember two truths that systems analysts have proven over and over.

1)             All systems produce results: intended and unintended, ones you want and ones you don’t. Some patients suffer, after “perfect” care. Low flush toilets use more water.

2)             All systems try to encourage (reward) the outcomes the system presumably wants and punish the ones it doesn’t. A commercial enterprise wants profits: it therefore rewards people who sell, and gives pink slips to those who don’t. A military system wants soldiers that are courageous and brave. It rewards those behaviors with honors, such as rank and medals. It court-martials those who run away from battle.

We should be able to uncover the raison d’etre of healthcare by learning the results it wants. We can determine what results healthcare wants by observing what it rewards.

Using this logic, the raison d’etre of healthcare is the following.

• Not giving health care, as we reward insurance – both private and government – if they do not spend money.
• Photogenic medical disasters, as malpractice lawyers get millions when a patient, preferably a child, is maimed during medical care.
• Ordering lots of tests; doing expensive procedures; and spending the least time with each patient, as we revere (and reward) the doctor who generates the most RVUs (relative value units). “Pay for performance” is the way providers are paid, so they “perform.”
• Not knowing your patients names, as the more patients a nurse is responsible for, the more efficient she is deemed, and efficiency is rewarded.
• Keeping people in their hospital beds, as hospitals make money when they are at “optimal utilization.”
• Being “out of compliance:” this rewards regulators by generating a whole new round of regulations, which of course requires hiring even more regulators.

Wait a minute! That is ridiculous. No care, medical disasters, over-usage, stuck-in-hospital, and non-compliance are precisely what we do not want from healthcare. It is, however, what healthcare rewards. Maybe the healthcare system wants different outcomes from what we want.

Conclusion: the incentives in healthcare are contradictory and perverse. The system rewards the very things we do not want and discourages the things we do want.

We-The-Patients want to live a long time and to be healthy. That is what individuals want, for their personal wellbeing. Long life and good health of the populace is also what our nation wants, because that is how the U.S. competes successfully. Apparently, long life and good health are not what healthcare wants – the system does not even measure and therefore cannot reward those outcomes.

You can call healthcare’s problem perverse incentives, disconnection, or mis-alignment, but whatever you label it, you now understand why We-The-Patients get from our healthcare system the precise outcomes we don’t want: more cost and less service.

If you practice medicine on healthcare the way that Washington does, you will simply treat the overt symptoms. That is how we get the ACA, with more regulations, six while new bureaucracies, and less money for service. They call this healthcare reform (change for better), but in reality, it is healthcare exacerbation (makes things worse).

If you want to practice good medicine on healthcare, you will do the following. A) You will evaluate all the evidence including what has happened in other systems such as Canada or Great Britain). B) You will do root cause analysis to find out why we get the outcomes we don’t want and not the ones we do. C) You will change the system so that the problem – misalignment (malalignment) – ceases to exist.

Relatively simple? Straightforward and doable? Now? Yes, Yes, and Yes.

Politically possible? Likely to happen? No, and not a chance.

System MD

There is an 800-pound gorilla sitting on healthcare, and it is invisible. Truthfully, it is highly visible, but we choose to ignore it.

The gorilla is made up of 12-15 million illegal residents of our country, some who have been here for decades. Washington has turned a blind eye toward them and their health care. However, you can only ignore an 800-pound gorilla for so long. Eventually, it WILL make its presence known.

Fact #1: The GAO study on Uninsured Americans reported 45 million with that status, of which 12-15 million were illegal (undocumented) residents.

Fact #2: Federal law requires that any patient presenting to a Federally funded hospital who requires urgent or emergent medical care must receive that care, regardless of ability to pay and without regard to immigration status: legal or otherwise. Thus, an illegal resident having a heart attack will get care, while the facility and providers will receive no reimbursement.

To deal with this huge loss (expenditure with no compensating revenue), hospitals must revenue-shift. This means they charge others more in order to avoid going out of business. This is not a problem for insurers, government or private, as they pay nothing for care for illegals. To give a sense of magnitude, such uncompensated care accounted for 15% of the total annual budget of my own institution. That was $125 million the hospital had to “find” somewhere else or close its doors.

Fact #3: I believe that the Patient Protection and Affordable Health Care Act of 2010 (PPAHCA, now shortened to ACA) excludes illegal residents from the penalties imposed for failure to acquire health insurance, the so-called individual mandate. (I write “I believe” because the law’s language is so ambiguous that it can be interpreted in multiple ways.)

Fact #4: Even before ACA, 24% of all uninsured Americans qualified for free Federal health insurance assistance programs but did not sign up. Whatever their reasons for choosing not to obtain free insurance, they received medical care – mandated but unfunded – at no cost to them but at a cost (to others – that is you and me) well in excess of $50 billion per year nationally.

So, if I understand things, the following is true and constitutes an 800-pound readily visible but ignored gorilla.

a)              Under ACA (if upheld by the Supreme Court) a legal U.S. resident (citizen) can be penalized for failing to purchase health insurance. An illegal resident cannot. This is equitable…how?

b)             As ACA does not change the laws pertaining to unfunded mandates both legal and illegal residents, with or without insurance, will get urgent/emergent care. The need for cost- (really revenue-) shifting goes unresolved, and…

c)              ACA adds additional cuts to Medicare reimbursements, so there is even less money that hospitals can shift to cover uncompensated care.

What new incentives exist to make illegal residents sign up for insurance when they have not in the past? There are none in the ACA. If illegals do not sign up, then what happens to the savings that were supposed to come from people getting earlier, preventative and therefore less expensive care because “everyone” would have insurance?

The  gorilla analogy embodies two fundamental, inter-related issues: freedom and personal responsibility.

Are there any limits to Federal government control of our personal lives? Are illegal residents more free and more entitled than citizens?

Is there any personal responsibility in healthcare? If insurance is available to all and a person refuses to sign up, can health care providers deny that patient care? If not, then personal responsibility does not exist in health care.

The gorilla will remain an 800-pound problem until we take off the cloak of invisibility and deal with him (or her). We cannot go much longer emulating the ostrich.

A recent online article claimed, “Competition hasn’t work in health care.”  With respect, the author is completely off base. Real, effective competition has never been tried in healthcare.

Suppose that American football competed the way that American healthcare “competes.” What would it look like? What would happen?

First, there would be no coin toss. In healthcare, there is no agreement upon goals and therefore, you don’t know where the goalposts are that you must defend.

At the start of the game, the kicker would quietly sneak several strides back from the ball to get a running start and would turn around. He has to be sneaky about what he does because the rules require him to stand within one foot of the ball at kickoff and face away from the ball. Health care providers are saddled with equally ridiculous rules and regulations that make it hard-to-impossible for them to do their jobs.

As the game progresses, the halfback will fight  (compete with) his own quarterback for possession of the ball, just the way providers and insurers – both government and private – compete for a limited number of dollars.

The offense would move the ball backwards rather than forwards. They fear an offside penalty. Health care providers also live in fear of being offside, which in their world is called being “out of regulatory compliance.” Providers therefore must focus more on following rules than doing whatever the patient needs.

What does “winning” look like? If football kept score like healthcare, the winner would be whoever spends the least this week on player compensation. The score of last week’s game would go unnoticed because no one cares about outcomes, only about spending.

(Lest you think that ACOs (accountable care organizations) will solve this problem, they too compete for – they reward – dollars saved, not long term patient outcomes.)

What do football teams compete for? You start to answer, “Winning games,” but after thinking some more, you reply, “Well eventually, they want to win the Super Bowl.”

Notice that the desired outcome is in the far future, not this coming week. More important, winning the Super Bowl is not what the teams really compete for. In the final analysis, what they compete for – what they really want – are fans.

Fans translate into ticket sales. Fans represent bonus payments and endorsement contracts. Once acquired, fans tend to be loyal, even if the team is having a bad year.  In football, competition is all about fans. The “winner” is the one with the most fans.

What about healthcare? What do their players compete for? What should they compete for??

Apparently, healthcare keeps score based solely on initial spending. All we hear about is cutting costs  – really expenditures – in the next budget cycle. Successful players of the healthcare game are the ones who cut today’s costs the most. Is that really what We The Patients want?

Healthcare also competes for how many patients a plan can sign up but not how those patients do medically. Health status is not included in the scoring at all: competition has nothing to do with patient welfare.

Much worse, healthcare has its time line totally wrong. It looks only at immediate financial statements. Football players know they competing for an expanded and expanding fan base – for the future. Healthcare players seem oblivious to future patient outcomes. What they don’t competing for, but should, are two outcomes: long term good health of the populace, and avoided costs for decades to come.

If football competed the way that healthcare does, no one would watch. No one would care. In healthcare, people care a great deal but they do not understand that it is competing all wrong. Further, the game itself – of healthcare – works against itself and our welfare.

If the above seems too amorphous and theoretical, consider a different, more specific analogy. It is taken from the book, Not Right!, which will be available in late 2012.

Imagine an American football game where the players’ helmets are completely solid and totally opaque. They cannot see anyone or hear anything.

The players’ jerseys have bid letters on them representing teams named Congress, Doctors, Hospitals, Insurance, Lawyers, Nurses, Pharmaceuticals, Regulators, and Unions. There is no Team PT (for patients), but they – the patients – are on the playing field. They have no helmets, mouth guards, pads, or protection of any kind.

In this football competition, just as in U.S. healthcare, the rules are contradictory; the game plans keep changing; the owners keep making promises they can’t keep; and the goalposts are invisible.

Can you envision this game? Imagine the confusion, the mayhem. As the players cannot see or hear, they run around blindly and without coordination. They knock down whatever they encounter: other players, their own teammates, the referees, the goalposts, even and especially the (unprotected) patients.

How do you play a game like that? What do the players compete for? How do you keep score? Who wins? Who loses? That is how U.S. healthcare currently “competes.”

You cannot tell who wins. You can be sure who loses.

Further Reading
1. Uproot U.S. Healthcare, Expanded 2nd Edition, 2012, JD Waldman. ADM Books: Albuquerque, NM.
2. We live in the 21st century: Healthcare is still mired in the 19th. 1/5/11, JD Waldman, http://www.uproothealthcare.com/curing-healthcare/we-are-in-the-21st-century-healthcare-is-still-back-in-the-19th.
3. Health policy IS Fiscal Policy, 5/20/11, JD Waldman. http://www.uproothealthcare.com/politics/health-policy-is-fiscal-policy
4. House Calls Are Cheaper Than Hospital Beds, 3/17/11, JD Waldman. http://www.uproothealthcare.com/money-in-healthcare/house-calls-are-cheaper-than-hospital-beds.
5. Do We Want Financial Incentives/The Free Market/Capitalism in Healthcare? 7/2/10, JD Waldman. http://thesystemmd.com/?p=1200.
6. Not Right! – A Healthcare Dialogue, (available late 2012), JD Waldman. ADM Books: Albuquerque, NM.

Everyone is talking about healthcare – talking, but not communicating. To communicate successfully, we first need a common language.

In healthcare, people don’t agree about the meanings of simple words such as control, cost, cut, free, and charge.

The five phrases below are quotes taken from two recent online articles about our dying U.S. healthcare system. They epitomize the 2012 American Towel of Babel.

1) “Control the costs of medical care” starts our mass confusion. A payer, whether government or private insurer, does not control costs. They control their expenditures.

Most people define the word cost as “the sum of resources required to deliver a service or to offer a product for sale.” In health care, only patients can control costs, acting on advice of doctors. Government or private insurance companies control what they pay. They cannot control what things cost.

The true cost of medical services is unknown. That’s right! Neither your doctor nor your medical institution  knows the actual cost (defined as above) for the services they provide. When I asked two different hospitals the true cost of a cardiac catheterization and specified that cost should be measured as specific resources utilized, they both replied, “We do not account our costs that way.”

2) “Free care to poor patients” is another misnomer. Medical care may be free to (not paid by) a specific patient. Health care is never free. Someone has to pay nurses’ salaries, amortization on buildings, disposables, electricity, and the ever-popular liability insurance premiums. Medical care that is “free” to one patient must be paid by another, without permission. (Isn’t that called, ah, stealing?)

When it comes to modern technological medical care, “poor patient” refers to virtually all of us. If your household income is $100,000, you are in the lucky top 16% of the population. You could not begin to pay out of pocket the bill for your open heart surgery ($250,000) or the defibrillator pacemaker you need ($125,000).

3) The Service Employees Union of California has proposed that “hospitals would be limited [in what they are] charging patients.” But, hospitals already are. There are strict Federal rules governing how much a hospital or a doctor can charge. Further, they must charge the same regardless of payer source. This includes patients who have no payment source at all (unfunded care). So, they provide care and then charge, knowing they won’t get paid.

To sort out this mess, just remember two NON-relationships.

• Charges for medical care have no relationship to revenue received.
• Costs to provide medical care have no relationship to charges.

These two statements: a) Are absolutely true; b) Are not common knowledge; and c) Explain much of the confusion about money in healthcare, the system, as well as health care, the service.

4) “Charges [are] significantly more than actual costs.” Well, duh!? Any business – Ford Motor Company, your local hospital, your family doctor, or your family – either makes more than it spends or it goes bankrupt. Unlike the Federal government, the rest of us cannot print money. We either cover our costs or we go out of business (as many hospitals are doing).

The quote above (#4) about ‘charges exceeding costs’ was talking about individual patients, not overall finances.  It implied that patients were being ripped off because the charges the patient sees on the hospital’s or doctor’s Bill for Services Rendered are so much greater than what the patient thinks the costs are.

But recall that: A) No one knows the true costs of care per patient, and B) Actual reimbursements are only a tiny fraction of billed charges. When I do a cardiac catheterization in a critically ill baby, my fee is generally $4000-$7000. Want to guess the actual payment from Medicaid? Answer: $387.

5) “If a hospital’s charges…exceed [a] threshold for the year, the hospital would be required to issue refunds.” This proposal is nothing less than government-sanctioned theft. Revenue to hospitals and providers is always a small fraction of the billed charges, ranging from as high as 60% to as low as 3%. Do not forget mandated but unfunded care where the reimbursement rate is zero – no revenue at all, but plenty of costs that must be paid.

So, if a hospital’s charges (not revenue) exceed some arbitrary level, say 80% of last year’s charges, the hospital will have to refund the difference, money that it never received.  I can just see the Federal government enforcing a law where an undocumented resident needed and received emergency surgery; where the patient paid nothing; where the hospital was paid nothing; and where the hospital was required – by law – to give a “refund.”

Welcome to the Dictionary of Medical Terminology, 2012 Edition, written by the Mad Hatter (of Alice in Wonderland.)

• Cost ≠ cost. Cost = unknown.
• Charge >>> payment. Both are government-determined.
• Control and free care are meaningless terms.
• Cost cutting = reducing payer outlay. Cost cutting = cutting services.
• Consumer does not pay for what is consumed.
• Supply ≠ demand.

Is it any wonder that both healthcare and health care are drowning in red ink, and taking us with them?

Sick things – whether people or systems – need cures, not sedation, not palliation, and certainly not snake oil.

The Medicare program was sedation. It lulled us in thinking we could prepay the government for health care and then get whatever we needed when we needed it. Now, Medicare is going broke and Congress is “saving it” by cutting payments which means cutting services. They are saving Medicare by making care unavailable to seniors.

Both HIPAA (Health Insurance Portability and Accountability Act) and UMRA (Unfunded Mandate Reconciliation Act) were palliation. They made us feel better temporarily but fixed nothing. So, people don’t have an insurance portability problem, because they don’t have insurance. Unfunded mandates are still unfunded, so hospitals must steal from insured patients to pay for care they must give to the uninsured for “free.”

Snake oil used to be sold in the U.S. by smooth-talking salesmen claiming it could instantly cure all sorts of medical conditions, from abdominal colic through “men’s complaint” (erectile dysfunction) to rheumatism. Snake oil had no medicinal properties and the salesmen wisely rode out of town before their mendacity led them to the hanging tree.

Today’s snake oil – with which Washington is liberally dosing America – is PPACA (Patient Protection and Affordable Care Act). The supposedly active ingredients are the individual mandate to buy insurance and the health [insurance] exchange.

Discussing the individual mandate is a waste of time until the Supreme Court decides to uphold it or strike it down.

Health exchanges are touted as the use of market competition to reduce costs and improve access. The “American Experiment” called the U.S. proved that in a free market, consumers can get better or cheaper, usually both.

Look at what free market competition did for Lasik (corrective eye) surgery. Availability went up. Prices plummeted and the success rate now approaches 100%. The Washington salesmen promised We The Patients the same results from the health exchanges: better and cheaper.

Free market competition, emphasis on “free,” means that various sellers of products or services are allowed unrestricted competition based on quality, such as benefits, availability, or features, as well as on price. In a free market, consumers pay their own, hard-earned money for goods or services. Consumers decide for themselves what is their best value. By choosing some sellers over others, they decide on winners and losers in the marketplace.

A health [insurance] exchange is the exact opposite .

• Sellers (of insurance) cannot compete based on benefits. They are strictly regulated as to what benefits they can and cannot offer.
• Sellers (of insurance) are forbidden to compete across State lines. Imagine selling cars or potatoes under these circumstances.
• Sellers (of insurance) cannot compete on what they pay their suppliers (doctors). They follow the Medicare Reimbursement schedule. Thus, they cannot compete on price to the consumer.
• Consumers (of health care) have no data on which to judge value of goods and services they are buying. Imagine purchasing a car without knowing what mileage it gets, how much the maintenance schedule will cost, or what the resale value will be, what features the car has, or even what it will cost!
• Consumers (of health care) do not control (spend) their own money. Thus, the moral hazard applies.
• Consumers (of health care) cannot choose among competing insurance sellers. The sellers do not compete (see above). Most Americans get their insurance through their employer, which gives the workers a very short list of insurance options. For the unemployed, there is no “market” of competing insurers.

Since there is no free market competition, how can consumers – We The Patients – get better and/or cheaper? Answer: we can’t.

Wisconsin studied the PPACA exchange and found that PPACA constrains competition, makes consumers pay more for insurance, and 100,000 of their residents “will be involuntarily dropped from employer sponsored health insurance” (Press Release of August 24, 2011). No wonder Governors Walker (WI) and Susanna Martinez (NM) rejected implementing a health exchange.

Supporters of such exchanges have offered both carrot and stick. The carrots are sizable grants for the Federal government to defray set-up costs. The stick is the threat that States will lose their Medicaid funding if they fail to create PPACA exchanges.

Both the carrot and the stick are more snake oil. The grants are one-time allocations but the exchanges will have ongoing costs along with the “hidden tax” as described in the Gruber Report on Wisconsin and PPACA.

The sticks (punishments for failing to set up an insurance) are much worse. First, there is the threat of “loss of Federal matching funds.” Governor “Butch” Otter first announced that he had not only garnered $37 million in Federal funding for Idaho but also saved over $300 million in Medicaid money that would have been lost if he did not set up an exchange. Then quite publicly, he had to retract the latter because it just wasn’t true.

A second PPACA stick is suppression of competition. Each State exchange must follow Federal rules and regulations that virtually eliminate any real, free market competition. Governor Haler Barbour said on national television that his State of Mississippi already had a vibrant, competitive health insurance market, and that PPACA exchanges would destroy it.  .

Throughout the nation, private insurance premiums – already beyond many citizens’ ability to pay – are escalating an additional 30% or more. Employers are being forced to drop health coverage for employees.

So much for “cheaper” as a result of having health exchanges. What about “better?”

The bureaucratic costs of health exchanges are enormous, both for the States and for the Federal government. At the same time as it spends money (Medicaid grants) for set-up, Washington “saves money” by reducing payments to providers. This stick directly hurts patients.

Writing in January 2012, Jaime Leopold, the Director of the Arizona Breast Cancer Society wrote, “We have had over 45 people since September [2011] that have had their coverage cut mid-treatment.” That means money is being taken away from treating cancer patients to pay for new bureaucrats.  To whom should we complain about this grotesque cost – really revenue – shifting? Clearly PPACA exchanges fail to make health care either “better” or “cheaper.”

The State of Utah did set up a PPACA-like exchange. Of the over one hundred thousand people eligible to sign up for their State’s “free insurance,” five thousand did. Apparently, Americans know snake oil when they encounter it. Health exchanges are a liberal application of the smelly stuff.

Henry David Thoreau wrote that, “All perception of truth is the detection of an analogy.” Let’s use analogies to comprehend the seemingly incomprehensible: healthcare in the U.S. Below, the word “they” refers to power brokers in Washington, on both sides of the aisle, and in the White House.

• They are concentrating on one vein on one leaf of one tree, while the whole forest is ablaze.
• They remain intensely focused on a tiny germ under a microscope while an earthquake is destroying the lab.
• They have precisely lined up all the deckchairs on their magnificent new, “unsinkable” ship – the Titanic.
• They are applying anti-acne cream to a patient with a brain tumor (T).

The basic truth described in these analogies may seem obvious to you and me, but apparently, it escapes people who work within the Beltway. They are focused on the trivia while the big problem gets worse.

The “doctors” for the critically ill U.S. healthcare system – our Representatives in Washington – are altering financing and expanding regulations, apparently without any understanding of why patient Healthcare is sick. As a result of their treatment, the patient is deteriorating. Indeed, patient Healthcare is dying, and when it goes, we will go with it.

The following is a list of Healthcare’s signs and symptoms. Every good nurse or doctor knows you don’t treat these.

• Spending too much, both individually and as nations
• Lack of health care goods and services
• Shortages of trained personnel
• Limitations in access
• Errors and adverse impacts
• Variations in both quality and payment for similar services.
• Medical bills were formerly the leading cause of personal bankruptcy in the U.S. until the 2009 real estate collapse. Medical bills have now “slipped” to second place.

The list above does not include the causes of patient Healthcare’s woes. Those are the things you do treat, like perverse incentives, action without evidence, spending that delivers no value, suppression of market forces, and preventing learning.

You cannot cure over-spending by spending even more, as does the PPACA (Patient Protection and Affordable Care Act, called “Obamacare”). You determine where the dollars are going – the “spending” – and decide which of those expenditures is “over-”, meaning which dollars we are spending that show a negative cost/benefit ratio.

The Beltway-doctors say they are “fixing” healthcare by infusing competition through health exchanges. Those exchanges actually expand government control of healthcare and thereby, they suppress the free market forces that give consumers better, cheaper, and quicker. Even as Congress promises lower insurance costs through Federally mandated exchanges, you and I see our insurance premiums skyrocket.

Congress reduces payments to providers and at the same time, they pay more to themselves. We get fewer doctors and nurses but more bureaucrats. Trillions are paid to healthcare – the system – leaving less and less for health care – the service. As Robert Moffit of the Heritage Foundation testified before Congress, “One cannot get more of something by paying less for it.”

The only people we can count on to act in our best interests is us, not as in U.S., but as in you and me, We The Patients speaking as We The People. What should we do?

Sick patients, such as Healthcare, should be treated by people who practice good medicine. The self-proclaimed healers of Healthcare in Washington repeatedly shout: “Trust me! I have your best interests at heart!! Pay no attention to who is funding my re-election campaign.” You can easily see how patient Healthcare is doing under their fine care.

The following are the basic principles of good medical practice, whether the patient is a sick person or a sick system. This is what the Washington-doctors are NOT doing.

1. Evidence based decision-making
2. Treat causes, not symptoms.
3. Long term (cost + risk) / benefits analysis
4. Partnership with the patient

What should We The Patients do? First, we must accept the job of becoming We The Doctors for patient Healthcare. If we wait for someone else, it won’t get done, and certainly will not get done right.

Next, we must accept the fact that the “system” we currently have cannot be adjusted, managed, tweaked, or reformed to make it efficient and effective. It is not just a broken system. It is no system at all. We need to create a real system, one that works…for us.

Congress is guilty of nanomanaging Healthcare, which is “a thousand times worse than micromanagement.” They substitute logic and passion for hard data and cost/benefit analysis. We must demand that all Congressional actions have evidence in advance of legislation. Such evidence must include, as the engineers say, both problem definition and proof of effect.

Finally, though we are temporarily acting as Doctors for Healthcare, we also remain We The Patients. It is crucial that we demand a partnership with the Federal government. We want the exact opposite of how we were treated with regard to PPACA.

Economist Robert Samuelson has declared that health care costs are “out of control.” Though one hesitates to disagree with a widely syndicated columnist, Samuelson is 180 degrees wrong.   Health care costs are IN control – very tight control – by Washington.

Health care as two words refers to goods and services delivered by hospitals and providers to be consumed by patients. The word costs, when referring to what providers and institutions must pay, is determined primarily by government regulation and bureaucracy rather than by labor costs, supplies, or MRI machines. Payments to providers and institutions –what the government calls costs – are predetermined by the government. The bill submitted by a provider is generally irrelevant.

Whether you describe excessive national expenditure of money as costs or as payments (reimbursements), spending is strictly controlled by the government. It is not “out of control” at all.

Note first that when the PPAHCA (“Obamacare”) reduced Medicare “costs” by 21%, they cut Medicare payments (to providers). Therefore, they cut services to patients. As Robert Moffit of the Heritage Foundation testified before Congress, “you cannot get more of something by paying less for it.”

Meanwhile, PPAHCA increased spending ON – the costs OF – the federal healthcare bureaucracy by six whole new agencies, hundreds (? thousands) of bureaucrats added to the payrolls, and multi-thousands of new rules and regulations. So the government controls and increases spending to/on itself, while it controls and decreases spending on patients.

Need proof? Of all the money spent on “healthcare” in 2010, 40% – that is over $1 trillion – …disappeared. It went in to healthcare but provided no health care. That statistic was before PPAHCA, which could raise the disappearing dollars to half (!) of all healthcare spending.

Samuelson goes on to use the recent OECD (Office for Economic Cooperation and Development) report to explain U.S. overspending: steep prices and abundant provision of expensive services. Hogwash! As Dr. Samuelson knows, “price” is meaningless in healthcare in terms of what gets paid.

As a doctor, I can charge whatever I like for doing a cardiac catheterization in a baby. The actual bill can read $2000, $4000, and sometimes over $5000. Regardless of what you call my price, charge, or bill, I get $387. That is what the government pays. So the price may seem steep but the payment is peanuts.

For Medicare, just as for my caths, payments are now lower than the cost-of-doing-business. So if you want to know your Medicare doctor can no longer see you and is not accepting new patients, it is because she gets paid less by Medicare than her costs to keep the office doors open.

How much of healthcare spending is for administration and regulations? No one knows because no one measures. Government administration guesses at how much it directly pays itself, and conveniently ignores the costs – to providers and the public – of the ever-expanding mountain of regulations.

Samuelson rightly asserts that, “the system needs a fundamental overhaul to deliver more value for money.” No one disagrees…except those in charge. In order to determine value, one must measure cost, measure benefit, and compare the two. Does the government measure either the benefits of health care or the benefits of healthcare? The answer is a resounding No!

So how can you-the-consumer, whom I call We The Patients, assess value? If you only know part of the numerator and none of the denominator of a cost/benefit ratio, you can’t.

Finally, Professor Samuelson practices really bad medicine … on healthcare. He jumps directly from symptom identification (overspending) to treatment plans (vouchers or single payer) without going through the critical step of root cause analysis.

If you want to cure anything, whether it is a sick person or a sick system, you must treat the cause(s) of illness. Overspending is only one part of the sickness in healthcare. If we try to fix it without resolving its root cause as well as the other causes of illness in the system, we are certain to fail, just as Obamacare – with its expanded control – is certain to make healthcare, We The Patients, and America sicker.