In a recent NEJM article a Rand group presented results from a recent study they performed regarding means and methods to reduce costs. The chart below is our rendering of those results from that article.
As they speak about the need to reduce costs they state:
" To achieve this goal, spending on health care over the next decade would have to be reduced by 6.2% from the amount the Centers for Medicare and Medicaid Services estimates the country would otherwise spend. This proposed reduction provides a framework for evaluating the options now under consideration. We recently produced quantitative estimates of the likely impact of 12 policy options for reducing health care spending in Massachusetts, 2 and we have extrapolated from that work to produce estimates for the country as a whole. We identified 8 options that evidence suggests have the potential to reduce spending and are broadly applicable to the United States. For these options, we developed high and low estimates..."
We show these 8 options above. Note the following as we have discussed many times:
1. Bundling: This is another term for "cram down" on physicians. It is the bright spot in the legislation since everyone is hanging their hat on it. Simply a bundling is the taking of say a hospital and giving it the core responsibility for caring for a specific health care event, such as an MI. The hospital then chooses all the physicians and it may most likely choose those who bid the lowest price to belong to the bundle. It is akin to the Government using equipment supplied by the low price bidder, you often get what you pay for. Besides bundling breaks the relationship between a patient and their physician and also institutionalizes the hospital's way of doing things. It will result in a stagnation of medical care improvements. The hospital administration will cram lower costs down on the physicians it selects. If patients hated HMOs they will come to truly despise hospital administrations.
2. Rate Regulation: This is nothing more than cost control. You control costs then you reduce services then you ration. Simple. I really begin to like these Rand Geniuses, they come us with such a brilliant group of suggestions! Let us keep going.
3. HIT: Well Rand has been pushing this for years. Yes it ultimately has a use, and yes it will improve health care but as one learns in medical school, if all else fails listen to the patient. Osler was not wrong. I have been watching the younger physicians hiding at their terminals or now their iPhones, as if they were practicing medicine. Or the middle age docs typing like crazy, two fingers, just like me, and not looking at the patient, not once. HIT will evolve and it will arrive, but not in anytime frame for any cost savings. Sorry Rand, that's life.
3. NP-PA: This is just triage, we see it all the time in the emergency room. Yet there is the question of where to triage with whom. Triage with a nurse may be less cost effective than triaging with a physician. For example if we triage with a physician then the second step may be the correct one whereas if we triage with a nurse there may be many more intermediary steps and quality drops as well. This has been demonstrated anecdotal but should be studied. The issue is that Rand just assumes the answer is correct and just uses the lower costs.
4. Medical Homes: This may have some value as I have studied them. This is for the chronically ill person, Type II Diabetes and the like.
In summary, these are all wishful thinking with little if any facts to back them up, and with indeed many examples to demonstrate their clear lack of effectiveness. The problem is Rand feeds this stuff to the Administration and then Congress and somehow it is considered ex cathedra. Rand does provide a "warning" in the last paragraph but one would suspect that such a warning belies the strength of the picture. Congress just does not read, anything! Including health care bills. One should be very careful of "shingling a roof in the fog".
As they speak about the need to reduce costs they state:
" To achieve this goal, spending on health care over the next decade would have to be reduced by 6.2% from the amount the Centers for Medicare and Medicaid Services estimates the country would otherwise spend. This proposed reduction provides a framework for evaluating the options now under consideration. We recently produced quantitative estimates of the likely impact of 12 policy options for reducing health care spending in Massachusetts, 2 and we have extrapolated from that work to produce estimates for the country as a whole. We identified 8 options that evidence suggests have the potential to reduce spending and are broadly applicable to the United States. For these options, we developed high and low estimates..."
We show these 8 options above. Note the following as we have discussed many times:
1. Bundling: This is another term for "cram down" on physicians. It is the bright spot in the legislation since everyone is hanging their hat on it. Simply a bundling is the taking of say a hospital and giving it the core responsibility for caring for a specific health care event, such as an MI. The hospital then chooses all the physicians and it may most likely choose those who bid the lowest price to belong to the bundle. It is akin to the Government using equipment supplied by the low price bidder, you often get what you pay for. Besides bundling breaks the relationship between a patient and their physician and also institutionalizes the hospital's way of doing things. It will result in a stagnation of medical care improvements. The hospital administration will cram lower costs down on the physicians it selects. If patients hated HMOs they will come to truly despise hospital administrations.
2. Rate Regulation: This is nothing more than cost control. You control costs then you reduce services then you ration. Simple. I really begin to like these Rand Geniuses, they come us with such a brilliant group of suggestions! Let us keep going.
3. HIT: Well Rand has been pushing this for years. Yes it ultimately has a use, and yes it will improve health care but as one learns in medical school, if all else fails listen to the patient. Osler was not wrong. I have been watching the younger physicians hiding at their terminals or now their iPhones, as if they were practicing medicine. Or the middle age docs typing like crazy, two fingers, just like me, and not looking at the patient, not once. HIT will evolve and it will arrive, but not in anytime frame for any cost savings. Sorry Rand, that's life.
3. NP-PA: This is just triage, we see it all the time in the emergency room. Yet there is the question of where to triage with whom. Triage with a nurse may be less cost effective than triaging with a physician. For example if we triage with a physician then the second step may be the correct one whereas if we triage with a nurse there may be many more intermediary steps and quality drops as well. This has been demonstrated anecdotal but should be studied. The issue is that Rand just assumes the answer is correct and just uses the lower costs.
4. Medical Homes: This may have some value as I have studied them. This is for the chronically ill person, Type II Diabetes and the like.
In summary, these are all wishful thinking with little if any facts to back them up, and with indeed many examples to demonstrate their clear lack of effectiveness. The problem is Rand feeds this stuff to the Administration and then Congress and somehow it is considered ex cathedra. Rand does provide a "warning" in the last paragraph but one would suspect that such a warning belies the strength of the picture. Congress just does not read, anything! Including health care bills. One should be very careful of "shingling a roof in the fog".
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