I just attended the most amazing conference. Like most health conferences, this one ritualistically began with a recitation of the failures and inadequacies of the providers of care. But that only took an hour. Over the next three days there followed a series of speeches by the buyers of care - employers, insurance companies, government agencies, etc.- each explaining how his or her organization, sector, etc., was causing the very problems addressed in the first hour. "Speeches" is the wrong word. These were more like confessions, full of sorrow and remorse - even approaching Jimmy Swaggart-like tearfulness in some cases. The presentations by Blue Cross and the private charities were particularly moving.

In the open discussions, there was none of the usual finger pointing or blame shifting. Instead, the speakers vied with one another to accept responsibility, each claiming he was more guilty than the rest. At the close, everyone joined hands and sang Kum Ba Ya and vowed to sin no more.

Continue reading »

Bing! It's Round 6 for Goodman and Ali. Goodman pounces out of his corner. He's bobbing and weaving. Ali is looking a little groggy after the pounding he's taken for first five rounds.

Oops. Sorry. I was having a Walter Mitty moment.

Today's topic is entrepreneurship and everyone needs to get into a creative state of mind.

In a recent Wall Street Journal editorial, Harvard Business School professor Regina Herzlinger asks, "Why are there no entrepreneurs in health care?" Alert readers of this column already know some of the answers.

In our fee-for-service payment system, doctors are slaves to the way they are paid. It doesn't matter whether the payor is public or private. It also doesn't matter whether we are in the United States or in Canada. Doctors have no freedom to repackage and reprice their services. More precisely, regardless of how they repackage, they cannot reprice. So almost any innovation that raises quality or lowers the patient's costs means less - not more - net income for the physician.

Continue reading »

If you are not a policy wonk, you may not care about this issue very much.  If you are a wonk, read on.

I find that people who became steeped in the managed care way of thinking over the past two decades are often incapable of seeing the world in any other way.  How else can one explain Dave Kendall's Progressive Policy Institute response to my recent Wall Street Journal editorial?

Continue reading »

See my article in The Wall Street Journal today. It makes a point I haven't seen made anywhere else: In order to control costs and raise quality we must make changes on the supply side of the medical marketplace.

Managed care, pay-for-performance, and even Health Savings Accounts are all demand-side reforms. Their effects will be limited as long as doctors are not free to re-bundle and re-price these services.

How might that work? We need only look at those parts of the medical marketplace where providers compete on price and on quality. Examples:

• Cosmetic surgery
• Lasik surgery
• Walk-in clinics
• Internet drug sales
• Concierge doctors
• Medical tourism

Continue reading »

Applying the Economic Way of Thinking to Health Policy

Two recent articles by Milt Freudenheim in the NYT are worth reading.  The first describes companies that are providing onsite primary care to their employees.  Included are Toyota, Sprint and Pepsi Bottling.  Toyota's San Antonio plant, for example, has a blood-test lab, an x-ray center and its own pharmacy.

The second article describes the practice of employee provision of free services (deductible, no co-payment).  Eastman Chemical, for example, provides its employees with free mammograms, free vaccines for children and free drugs and supplies for diabetics.  Marriott is waiving co-payments for generic drugs related to heart disease, diabetes and asthma.  As one executive said, the aim is "to drive value and to target where care is most needed". 

Continue reading »

In Australia, 8 of every 10 doctors keep patient records electronically.  In New Zealand and Britain, the figure is 9 in 10.  In the Netherlands, almost every doctor uses electronic medical records (EMRs).  Yet in the US, the figure is less than 1 in 4.  Only Canada scores worse.  So says a recent Commonwealth Foundation report. (Click here to read.)

It gets worse.  In other countries doctors are more likely to be able to order prescriptions electronically, to get computerized alerts about potentially harmful drug interactions, and to get computerized prompts to send patients test results or notices about preventive or follow-up care.

So why are US doctors falling behind?  The short answer is because doctors in other countries get financial rewards for using computers and our doctors don't.  But why are other country's reward systems better?

Continue reading »

Why do doctors so rarely talk to patients by phone or e-mail?  When use of the computer is ubiquitous among other professionals (accountants, lawyers, architects, etc.), why do so few doctors maintain their patient records that way?  Why do so many doctors prescribe medicines without knowing what they cost?  And even when they know about generic substitutes, why don't they know those costs, or where patients might shop for drugs to get the lowest price?

My recent article, published online by Health Affairs, explains all these problems are a direct result of the way doctors are paid. 

Doctors are not paid to talk to you on the phone or by email. Blue Cross doesn't pay for consultations that aren't face-to-face, in the doctor's office. Neither does Medicare, nor do most employers.

Continue reading »