Troubleshooting the US health industry (was Re: Increased awareness of H-1B's and offshoring?)

[The Original Henry]

Henry, how would you know the foreigners have questionable credentials?  Are you knowledgeable about the licensing requirements in Germany? Or are you just assuming?

I'm friends with many doctors and dentists in Germany - some still practicing and some who have given up. I only know what they tell me. I suppose they could be lying to me, but I have no reason to believe that's the case.

One interesting thing: they all agree that the American health care system is crap. But they are careful to stress that their system is crap too and that basically we'd be stupid for trying to swap out one piece of crap for another. Their words of wisdom to me is that all health care systems are fatally flawed and that the best thing is to have variety to choose from. That way most people can find something that best suits their specific needs as those needs evolve and change through the course of one's life. "Universal health care" makes as much sense to them as "universal software" would to us.

[John Masterson]

Henry,

American cardiologists are one of the highest-paid specialties: the average pay is $400,000 a year.

I read a survey last week. In spite of their pay, 25% felt they were underpaid.  And 16% said if they could do it over again they would have gone for a business, finance, or law degree instead.  To me, these are the doctors who are motivated by money more than helping people get well.

Your anecdote about German physicians leaving to make more money made me think of the survey. The ones that leave, leave. Open the schools to smart people with a bit less of a drive for money and status, and you solve the problem.

In my opinion, healthcare professionals do not need to be wealthy millionaires. Excellent advanced-educated nurses do a lot to save lives and make great decisions for their patient's treatment, yet get paid nowhere near what specialty physicians make.

Worldwide, I think we'd do well to make medicine a moderately well-paid career with a sane work schedule and benefits.  This would easily attract enough excellent physicians who are motivated by something other than wealth.

Anyway, we are heading in this direction already as the costs of the healthcare systems worldwide become unsustainable.

[The Original Henry]

John,

That's not a bad idea, but how far can it really take us? Will the malpractice insurance soften their payments because they're not motivated by the bottom line? Will the medical equipment manufacturers give discounts because they want to help the doctors promote the good cause? Will the medical schools start educating doctors at a discount rate because they're not interested in becoming wealthy either?

You have to look at the whole system, not just bits and pieces. A doctor with 200k in school debt, 8 or more years of lost opportunity cost, insane insurance requirements, a brutal work schedule and an ultra-high stress job probably isn't making enough at 400k to justify the risks and sacrifices they make. As long as all of these external influences are in it for the almighty dollar then the doctor is left with little choice but to play his role in the system.

The ones that want to do it for the good of humanity are going to go places where that sort of thing is appreciated and supported by the entire ecosystem that surrounds his services. There's only so far that can take you as a society since not very many people are intrinsically motivated over the long term by simply doing good deeds for others. Too many people will start scamming the system, and a few will commandeer power so they can abuse it for their own good. It becomes corrupt and dysfunctional until a few people at the top hold all of the cards and everyone else is at their mercy. It's the way a lot of poor 3rd world countries seem to work.

[The Gorn]

My dentist or somebody in that practice told me that most of the cost of a procedure was in external services. (IE, most of the cost of a crown was the crown fabrication which they outsource to a "vendor".)

[John Masterson]

Henry,

Well, I have been part of the healthcare "ecosystem" since 1998. There has indeed been a lot of money available.

You chose a good term. It is an ecosystem: once a seemingly inexhaustible supply of nutrient became available (government dollars), then a rich webbed mat of "business organisms" attached to it, interlinked with each other. Like the famed $900 toilet seats procured by the military (same situation, really)...every link in the healthcare supply chain raised their prices to drain the available nutrient.

The thing is, it is now changing. Governments have to cut back, and all the vendors know it. Each "organism" in the system is looking for ways to keep their share of the nutrient and letting the others go with less.

But overall, once the nutrient dries up, the system will self-organize around a lower cost structure.

There will be fighting, and all will claim they have the "health of the patient" at heart, but costs of healthcare WILL come down as the nutrient shrinks. It has to.

And believe me, there are PLENTY of smart people in Asia that want a piece of this action. (As an aside, for the cardiology device that I deal with, all the really gifted heart surgeons currently happen to be Indian. They are still in the US, but that can change, too).

I have seen sales forces of the big companies shrinking as the "nutrient" dries up, and competent, hungry competitors pop up. The companies I work for are shrinking and becoming leaner and more competitive.

It's beginning to happen.

[John Masterson]

Gorn,

I just got a new porcelain crown. Gold was out of the question at the current price.

But the crown I got was $1,074. It took my dentist about an hour, total time. About 45 minutes for prep and casting, and 15 minutes to glue it on and adjust the contact surfaces. But she does really good work.

And I have to say, it fits *perfectly*. The new computerized casting and materials are *so* precise now. She showed it to me before she put it in. "Isn't it beautiful"? she said. She was right. It was porcelain fused over some sort of dark metal base for top strength.

I paid $474 as my portion. Thanks to insurance.

[I D Shukhov]

You chose a good term. It is an ecosystem: once a seemingly inexhaustible supply of nutrient became available (government dollars), then a rich webbed mat of "business organisms" attached to it, interlinked with each other. Like the famed $900 toilet seats procured by the military (same situation, really)...every link in the healthcare supply chain raised their prices to drain the available nutrient.

The thing is, it is now changing. Governments have to cut back, and all the vendors know it. Each "organism" in the system is looking for ways to keep their share of the nutrient and letting the others go with less.

But overall, once the nutrient dries up, the system will self-organize around a lower cost structure.

There will be fighting, and all will claim they have the "health of the patient" at heart, but costs of healthcare WILL come down as the nutrient shrinks. It has to.

John,

Are you referring to Medicare and Medicaid as being the source of runaway healthcare costs?  I suppose that reducing payments for some services that aren't cost-effective/ evidence-based -- aka rationing -- makes sense.

The reason, however, for the rise in healthcare is simply supply and demand.   Demand increases as medical science discovers new ways to cure disease.   I.e. 40 years ago there wasn't an array of chemotherapies, heart procedures, joint replacements, innumerable pharmaceutical treatments and costly science experiments at the end of life where 80% of a person's lifetime medical costs are incurred.

Since everyone wants to be as healthy as possible there's no end to the demand.   Thus the rise in cost.   

[John Masterson]

ID,

I was echoing something I read that made sense to me.  It was that once the government became the source of the payments, with Medicare and other social programs, then the prices the medical industry could charge were no longer limited by what typical Americans could pay out of pocket.  They were limited only by what the government could pay, and borrow. An almost unlimited resource.

As analysis shows, in the American healthcare system there is not a "market" in the real sense of the word.  The people making the buying decision are not using their own money, so they have no incentive to be limited in their choices as they would in a real market...as they would if it were coming out of their bank accounts dollar for dollar.

Prices always rise to the most people can pay, and they fall to what customers can afford if they get too high and people stop buying.

I am not opposed to universal healthcare, but unless the supply of government money made available shrinks, prices will remain high, as they are now.

[I D Shukhov]

ID,

I was echoing something I read that made sense to me.  It was that once the government became the source of the payments, with Medicare and other social programs, then the prices the medical industry could charge were no longer limited by what typical Americans could pay out of pocket.  They were limited only by what the government could pay, and borrow. An almost unlimited resource.

As analysis shows, in the American healthcare system there is not a "market" in the real sense of the word.  The people making the buying decision are not using their own money, so they have no incentive to be limited in their choices as they would in a real market...as they would if it were coming out of their bank accounts dollar for dollar.

Prices always rise to the most people can pay, and they fall to what customers can afford if they get too high and people stop buying.

I am not opposed to universal healthcare, but unless the supply of government money made available shrinks, prices will remain high, as they are now.

JM,
I think people make fundamentally different decisions about healthcare spending as opposed to other things.  If your child needs an appendectomy you'll spend whatever is asked.  Money is literally no object.   Same with almost every medical problem.  If you're sick you want the best care for yourself and family.  Everything else in life you can decline.  You can rent and not buy a house.  If you had to, you could forgo a car and take public transportation.   You could buy bulk rice and beans and have that every day.  Have an abscessed tooth and need a root canal?  You're going to go running to your dentist and pay the bill, whatever it is, later.

I believe that 95% of people don't want to be sick and will deny it as much as possible, but when it becomes necessary will try to get the best health care they know how to.  (The 5% are hypochondriacs and people with that mental illness where they seek out unneeded operations.)

So I don't think health care obeys the same market forces as other things.   The middle class would spend what they had without Medicare and would become destitute.  The health care system may take a bit of a hit, but nothing like what the rest of us would.

[The Gorn]

Gorn,

I just got a new porcelain crown. Gold was out of the question at the current price.

But the crown I got was $1,074. It took my dentist about an hour, total time. About 45 minutes for prep and casting, and 15 minutes to glue it on and adjust the contact surfaces. But she does really good work.

And I have to say, it fits *perfectly*. The new computerized casting and materials are *so* precise now. She showed it to me before she put it in. "Isn't it beautiful"? she said. She was right. It was porcelain fused over some sort of dark metal base for top strength.

I paid $474 as my portion. Thanks to insurance.

I went to my new dentist for the first time today. Well, I think he will be my dentist for awhile, assuming he performs. Night and day difference here from the last one.

So about the crown material: oddly, this guy told me that the cost of the gold crown was slightly less than the porcelain/metal laminate, and he strongly recommended the former for the elastic properties of gold.

He said  that the cost of fabrication for porcelain crowns drove their price higher than the gold crowns, which are made in fewer steps.

This guy's total price for the crown was ~1000. My old dentist was more than $1400 for the same tooth.

The gal at the desk could hardly believe it. I had been paying high prices for nerve jangling "professional courtesy" before.

[John Masterson]

Interesting. My dentist said right off the bat, gold is ridiculously expensive right now and not a good option.

[John Masterson]

ID,

I agree that the healthcare market doesn't work like other markets. People will pay all they can; but none of them have the cash for what any serious hospital stay or operation costs today.

At one of the major medical device companies I have worked with I used to often see several black limousines in the circular drive at their front door.  These were for the influential physicians they would pick up at the airport and bring in to headquarters for a day of schmoozing, and creating lucrative arrangements.  These would be the doctors who could heavily influence buying decisions.

It's changing now, as there are middleman companies now that work with groups of hospitals to negotiate lower prices.

The cost squeeze is on.

I think the medical industry, including physicians and hospitals and all the "ecosystem" is going to be getting less money for the work they do. And that's a good thing. Costs are unreasonably high, and there is tremendous waste and friction in the system. For one thing, way too much paper and forms processing.  It needs to be streamlined.

[I D Shukhov]

ID,

I agree that the healthcare market doesn't work like other markets. People will pay all they can; but none of them have the cash for what any serious hospital stay or operation costs today.

At one of the major medical device companies I have worked with I used to often see several black limousines in the circular drive at their front door.  These were for the influential physicians they would pick up at the airport and bring in to headquarters for a day of schmoozing, and creating lucrative arrangements.  These would be the doctors who could heavily influence buying decisions.

It's changing now, as there are middleman companies now that work with groups of hospitals to negotiate lower prices.

The cost squeeze is on.

I think the medical industry, including physicians and hospitals and all the "ecosystem" is going to be getting less money for the work they do. And that's a good thing. Costs are unreasonably high, and there is tremendous waste and friction in the system. For one thing, way too much paper and forms processing.  It needs to be streamlined.

JM,

I agree with everything you wrote.  I've never lived in countries with single-payer plans and have heard mixed reviews.  It sounds reasonable to me, though, that there should be some form of rationing at the end of life, that there needs to be cost controls and that treatments that are shown be to be cost-effective should be available to any U.S. citizen as part of coverage.

[John Masterson]

ID,
I think a LOT of our healthcare issues would close to solved if:

1) People took responsibility for their own health and kept themselves at a healthy weight, ate moderately, and exercised

2) Only cost effective treatments were authorized...regardless of the marketing budgets of Big Pharma and the rest of the industry

3) End of life treatments were rationed, so we don't pay $700,000 for 3 more weeks of life, etc.

4) The government opened a reasonably-priced medical school open to anyone who could pass the entrance exam and then pass the regular exams and clinical rotations. The school would provide full scholarships for Family Medicine/General Practitioner training.

[The Gorn]

I had a 6 month checkup appointment today, to discuss my last blood work.

The doctor tells me that due to the new federally mandated health care IT systems in place, their doctors can only schedule 2/3 of the appointments that they were able to before these changes. Her time is now spent doing data entry that she must do herself and can't delegate.

In my own case, a doctor's visit that last year I could schedule about a week in advance is now a month in advance. Actually, my last blood work was on April 5 and the *earliest* appointment I could get was May 25th, today. So that's about six weeks.

She said that the main driver for these changes is that Medicare and even the insurance companies now expect and mandate complete health dossiers on all individuals. They demand to track everything.

She did not expect a payoff in decreased workload in the next 5-10 years, even accounting for learning curve.

Now I need to call the doctor's office to get a correction made to the blood pressure medicine whose prescription they made a mistake on. I received only half the medication I was supposed to for the next 90 days. 

IT used to be about cost savings and efficiency. Now IT is about enslaving and monitoring everyone. IT in health care increases costs, burdens care providers with busywork, and reduces services.

One bit of humorous irony: the vendor of this system is Epic Systems Corporation. The reality of dealing with their system is "epic fail".