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What's the Most Expensive Technology? The Doctor's Pen

May 28, 2009
by daphne
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I just finished read an incredibly thought provoking article in this week’s New Yorker, called “The Cost Conundrum, “ by Atul Gawande. (Gawande, who teaches at Harvard Medical School and its School of Public Health, also authored that piece on Peter Provonst’s work , “The Checklist” that got so much attention .)

Anyway, what Gawande did was visit the small town of McAllen, Texas. McAllen has the highest Medicare cost per capita in the US--$15,000 per enrollee in 2006, or twice the national average. Was healthcare any better there? Actually, he found, the measurable outcomes were lower. Gawande wanted to find out why, exactly, that was.

The town was littered with imaging centers, home health agencies, medical supply stores—and doctors ordering PET scans, surgeries and test after test. “Medicine has become a pig trough here,” said one of the town doctors.

Gawande also went to the Mayo Clinic, one of the highest quality healthcare systems in the country, at one of the lowest costs. And the town of Grand Junction, Colorado, which achieved some Medicare’s highest quality of care scores in the nation. A lot of what he found at those two places had to do with totality of care, and who was in charge of it.

But back to McAllen, Texas. There is a lot of data in this story, but in the end, for that town anway, it boils down to one thing: an across the board overuse of medicine, and physicians who view their practice as a revenue stream. And, why some communities behave differently from others when it comes to healthcare is the $2.4 trillion question. Someone has to be accountable for the totality of care, or you get a system with no brakes, like McAllen.

This all depressed me somewhat because I am about to start writing a story on CRM (customer relationship management) in healthcare. Now, some CIOs I really respect are starting to talk about this concept—which basically is treating the patient as a customer… or is that revenue stream? Which, after reading Awande’s article, seems like maybe the worst thing in the world.

So I’m sort of in a conundrum myself.



AG - Thanks for asking.

I've shared my thoughts about P4P in my post, "What do Wall Street Bonuses and HCIT incentives have in common?
Does "Pay-for-Performance" send the same wrong signals?"

The conclusion of lots of far more knowledgeable folks is the P4P is a mixed bag. It's part of the solution but not sufficient by a long shot. We will get what we pay for, and that can be a problem.

I'd like to expand your model of doctors and self-interest. My first management class at Harvard started out like this:

There are two kinds of organizations in the world, budget-driven and market-driven. Both are important and necessary. They each attract different kinds of people, can do different kinds of work, and have different needs for motivation, information flow, decision rights, etc. Never confuse these two types of organizations and the types of people they attract.

There are definitely doctors who are market-driven.

There are an equal or larger number of doctors, in my experience, who are budget driven. They don't want to make a lot "more" money. They have different values about what "doing good" means.

These docs work for academic medical centers, or the government, or hospital administration, etc. They're almost always ISTJs. They value being able to spend their time in ways that are satisfying to them, more than the alternative revenue opportunities with associated time demands.

In both groups, the vast majority of physicians really care about their patients. The distribution of really smart physicians in the two groups is about the same as well, although the same may not be true for the distribution of narcissism. Frankly, I don't have a good sense about that distribution --- the giant pulsating egos in both groups skew the samples!

So harnessing the self-interest to get the outcomes is more subtle than P4P. Once you've met the budget-driven doctors criteria for a fair and reasonable return on their training investments, they're not motivated by a five to ten percent bonus opportunity. Many of them have walked away from larger financial opportunities.  (This has been well studied, numerous times.)

Another important part of the situation is that all relationships are reciprocal. Physicians over the recent decades, like many other professionals, have found their industry getting tougher.  Rightly or wrongly, it sends a message.

A decade ago, it was managed care putting pressure on their economic model. More recently, practice costs and reimbursement gaps have made many physicians eager to give up their independence.

I don't think we can ignore these factors when we think through restructuring.

Excellent post Daphne.

To fix healthcare, I think we must accept the underlying fact that, just like anyone else, doctors want to make money, pure and simple. We need to harness that "greed," if you want to call it that, to get the outcomes we desire. I truly believe that starting from any other premise is setting us all up for failure. We must find a way that doctors can make MORE money by providing BETTER, not MORE, care. We must find a way to incentivize doctors to care about patients after they leave the exam room, when there is no billable event "on the table."

The service that I pay a physician for must be to "get me better" not just to do things to me, not just to see me.

Joe, will current P4P models get us there, or is major restructuring needed in those concepts?

Prior to seeing your post, I had read the article "The Cost Conundrum", which I found very intriguing. I am not in full agreement with the final determination of the reason for the reimbursement disparity, but it does highlight several critical factors about our health system in our Capitalist society. Which drives us to ask some basic questions on healthcare financial incentives and drivers. A valuable statistic which is not included in the article is whether a similar disparity exists in the private health insurance reimbursement from patients in McAllen, TX versus Rochester, MN?
The McAllen situation may highlight the potential importance CMS has in implementing the Recovery Audit Contractor (RAC) automated reviews especially with respect to the medical necessity determination of the case. But this just continues to foster the "Cat and Mouse" game between Payers and Providers.
From a conceptual approach, P4P reimbursement models might help to address the issue with over prescribing but they will need to be based on "true patient health outcomes" which both providers and payers currently are not able to measure. Health outcomes verification and validation measurement is still in an infantile state. P4P reimbursement models have so far been based on procedural / process points or protocol compliance versus measurement of patient health outcomes.
I still believe this situation as with most needs to be addressed with a KISS (keep it simple st-d) approach. I am not sure if we are moving in that direction as we continue to struggle with our current or government envisioned payment models.
This article raised, but did not go into depth, a separate question on the effectiveness of technology in the improvement of healthcare. When does the "law of diminishing returns" take affect?

Joe, I hope your dad is OK. Well Atul wrote about revenue streams for the docs, but I know CIOs have to consider them too. I don't know about the machine, I guess. In this case it might work. I am still in the camp of "the old days" when docs didn't rely on tests as much as their deep learned expeienced vision.

Back to your dad--here's a good one for you. My mom needs her gallbladder removed, and the hospital where her primary care doc admits is out of the quesition. So she called me to say, "I'm looking for a surgeon. You know anybody? My gardener says his friend has somebody good." There is so much wrong with this picture...Healthcare reform is our moms and dads.

Thanks for making us aware of Atul's recent piece and it's implications.

This week, my mom asked me if my dad needed an EGD. He had 3 brief, self-limited episodes of vomiting over the last six months. If they're isolated, and related to viral syndromes, irritation from new medicines, or other common causes, an EGD would be over-kill and more risky the beneficial. I recommended against it for now.

That said, I could easily see a primary care provider or an specialist making the opposite decision. Whether for profit, for medicolegal concerns, or simply to lower anxiety by doing something.

So, your post hit home for me, too.

Our friend Anthony once said, (I'm paraphrasing) "let's just spend the 50 billion dollars on clinical research, cure the disease, and we can all go home!" I love the concept.

Back to my mom and dad. Suppose CIOs didn't have to attend to revenue streams? Suppose, they could offer my dad a high-speed 128 slice abdominal CT or MRI study that achieved the same assurance that there's no detectable cancer or ulcer? No risk from a procedure. And, through the miracle of payment reform, no $15,000 per enrollee impact.

Maybe, Anthony's vision has some relevance without relying on clinical research to cure disease.

My brother called me today and referred me to the New Yorker article. He told me the premise and I told him the cause. He was blown away that I was aware of the McAllen physician behavior.
Last year I did a consultation in a nearby town. The utilization was so out of line that the hospital was getting killed on reimbursement. They had identified one outlier that was responsible for length of stay exceeding three times normal. When I confronted the doctor he unabashedly lectured me that in the Valley the physicians were businessmen. They owned land and businesses. He belittled the CIO's concerns by saying "I have outlasted a half-dozen CIOs and I'll outlast this one." When I brought up peer-review he explained that he generates millions of dollars of work for the consultants and that no one would say anything bad about him. The ICU nurses and the utilization managers were demoralized. I was astounded and depressed. There truly was a culture of business over quality. Surely, not all physicians were like the one I described, but the culture tolerated him. By the way, he was right. The CIO that hired me was fired and life goes on unchanged.

As soon as a patient is viewed as a paycheck our healthcare system is headed for disaster. I'm sure this problem has gotten worse with the recession still going strong.

Wow, as soon as I read Gawande's piece (I subscribe to TNY)I knew it was important. And lo and behold, today's NY Times says Obama is holding meetings to discuss the article and citing McAllen as part of the dialogue to rein in healthcare costs. I feel so...hopeful.