I’m convinced the only way to control overuse and prices is with global budgeting. Maryland is doing global budgeting lite, but it’s a start. That said, it’s not a panacea. The VA is budgeted and its doctors are salaried and there’s still a lot of overtreatment — but at least it is less than the rest of the system.
It’s not a ploy. It’s a documented, sad reality that a significant amount of medical practice is not based on medical evidence, but is influenced by unscientific forces ranging from outside commercial entities (drug and medical device companies, mainly), physician incentives under fee for service medicine (the more you do the more you make), and individual physician beliefs based on their own experience, which is by definition a limited sample. Universal coverage by a single government entity (Medicare for All) would solve our coverage and excessive administrative costs problems, but wouldn’t undo those perverse incentives incentivizing unnecessary care.
I see it firsthand. Healthcare organizations game the system of value based care to fish for asymptomatic diagnoses to enhance reimbursement for patients in Medicare Advantage plans. There is no evidence that making a diagnosis of asymptomatic stage B heart failure or asymptomatic peripheral arterial disease results in benefit to the patient (in fact, there are well documented harms caused by overdiagnosis). This is supported by good science. This focus on financial outcomes has turned medical professionals who should know better into science deniers.
Agree wholeheartedly. Now if we could only convince the Medicare for All folks that Medicare’s fee for service system and physician compensation systems need reforming, too, if we are going to achieve AFFORDABLE health care for all.
Thanks for this walk through memory lane -- a very nice summary of our decades-old debate about the causes of geographic variation in health care cost. All along, the main purpose of studying cost variation by geographical areas has been to use lower cost areas as the existence proof that achieving lower cost is possible. The idea was to find out what works in those areas, and try to do the same elsewhere -- or the reverse, finding out what does not work in the high utilization areas and trying to stop doing those things.
But, it is always useful to step back and realize that when you care about improving our health care system (including improving both health and economic outcomes -- i.e. "value") and you study cost variation, you are implicitly limiting the scope of your search for cost saving opportunities to the structures and processes that already exist in some geographic areas. Cost variation studies do not identify opportunities to reduce cost (or, more importantly, to improve value) through innovation and optimization.
Innovation can take two main forms: (1) improvements in clinical decision-making processes (e.g. superior practice guidelines and protocols that can be determined through modeling, cost-effectiveness analysis, and consensus-building) and (2) improvements in care delivery processes (e.g. the fruits of CQI, TQM, 6 sigma, etc.).
As a fellow traveler in the health care improvement field, I lament the decline in interest in the admittedly tedious work of improvement, optimization and innovation. And I also lament the distraction from that tedious work caused by the continued focus on debating the relative strength of prices or utilization in predicting the cause of existing geographic variation.
A play on the headline on the Health Affairs article from 2003 by Gerard Anderson & Uwe Reinhardt: “It’s the prices, stupid”. If it was good enough for the late, great Uwe, it is good enough for me to draw attention to a finding that goes against current conventional wisdom, which is that our high health care costs are mainly driven by high prices.
The late Uwe Reinhardt and his wife May Cheng designed a non-profit single payer health system, free at the point of service, for Taiwan that provides more care for less cost to the whole population.
He advised them not to allow insurance companies from the start, saving 1/3 of every health care dollar from going to bureaucracy. (Making people “choose” plans makes the patient at fault if they choose wrongly. That’s not health care, its domestic violence)
They pay doctors fee for service. It’s not perfect but beats the alternatives. We all know “there are many ways to pay doctors, none of them very good”.
Instead of overutilization, its oversupply in some sectors driven by the need for profits, and undersupply in some sectors driven by the need for profits.
Drug companies raise their prices because they can. Private equity raises prices and reduces quality because they can. Insurers are not working for patients.
I submit it’s the profits distorting every aspect single aspect of health care.
Overuse of medications is part of this picture. Too often, people over 60 are assumed to have high blood pressure and heart disease and prescribed the corresponding pills. Patients who don't need these treatments or whose conditions could be improved by lifestyle changes risk the corresponding side effects, which are then misdiagnosed as diseases requiring yet more medications.
This is also driven by the financial incentives of HEDIS measures. If that blood pressure is not less than 140/90 your organization will not get a five star rating and that leaves a lot of money on the table. Clinical outcomes and benefits to patients be damned.
Also, most doctor's offices don't take blood pressures correctly by letting the patient sit quietly for a few minutes. This often makes BP look higher than it really is. I complain about this, but get nowhere.
U.S. "utilization" of expensive (and often unjustified) procedures, etc. is much higher than elsewhere. I have some data on that. I bet that's true across US regions. Wennberg showed it way-back-when across Vermont. So it's not just volume of a given basket of services, but variations in the baskets.
I agree that global budgeting and less FFS would help tamp down use of the expensive, low-value stuff. It would be interesting to see if variations across Germany or elsewhere in procedures and expenses are lower than here. As I understand it, there is still FFS in Germany, but only for outpatient work by office practitioners. Physicians in hospitals are paid salaries, and the hospitals have budget limits. And the regional medical societies that handle FFS payments have fixed budgets, so they monitor utilization and withhold payments to overusers to economize.
The belief that variation was driven by price led to simplistic thinking about spending — all you gotta do is bring down prices! But that approach was doomed in a system where a provider could keep revenue from falling by increasing utilization. (Which is a misleading term because it implies the patient, as “user” of medical services, is the one driving what services get paid for.) it has also led to the simplistic notion that increasing the number of doctors will bring down prices and therefore curb healthcare inflation. Mote doctors equals more utilization, without necessarily improving health.
I have some small experience here being a retired internist who worked in academic, public health and private-practice medicine. Excess utilization is probably 85% due to for-profit, fee-for-service medicine and 15% anxious patients and doctors. A doc who gets paid by the procedure be it skin biopsies, appendectomies, cardiac catheterizations, etc. Will look for opportunities to perform more procedures if he/she sees a chance or if he/she is employed will be ‘strongly encouraged’ by the employer to perform more. A well thought out national healthcare system could provide truly great healthcare for about 60% of what we spend now and cover everyone.
But lots of people are making bank on the current system and they don’t want to see a 40% haircut. Hence the persistence of our wasteful, irrational system.
Universal health care and an end of for-profit insurance companies would greatly reduce this problem for us, as it has for decades in civilized countries.
It’s not a ploy, it’s a fact that has been documented over and over and over again. And just because there’s massive underuse of effective treatments doesn’t mean there isn’t overuse and lots of just plain ineffective stuff.
Canadian here, 50 years in the health policy/health services research wars. We, too have variations in cost and utilization, although the way our system is funded makes it pretty much impossible for there to be as much population-level cost differences as between Medicare regions in the US.
There are remedies to all of the perverse incentives and completely unjustifiable practice variations and absurd price variations, but as Shannon Brownlee says (I'm paraphrasing here), we should not sane-wash the story. It's money and politics (now identical in the US), purely and simply.
But as noted, sub-systems like Kaiser and Intermountain Health do manage to deliver good care prudently. They have practice cultures that support it; physicians self-select into such cultures, and therein lies the hope and the problem. It is impossible to change physician practice cultures from the outside; the motivation, and importantly both the authority and accountability, must come from within. I've been in sessions countless times in Canada where some physicians are genuinely curious about practice variations and are worried about being an outlier, and others couldn't care less, some actually proud of their outlier status. Choosing Wisely has done fabulous and sadly ineffective work; medicine seems to require a rethinking of Rogers' Diffusion of Innovation theory because it is devilishly hard to get beyond the early adopters. The vanguard remains the vanguard.
As for malpractice, the evidence suggests that two things are true. One, it is a factor for some physicians, influenced (to some extend understandably) by anecdotes and personal experience. But the whole field is rife with false positives and false negatives, so the one certainty is that there is almost no justice. Second, all of this is remediable: a no-fault system. Of course no-fault is imperfect, but it is infinitely less imperfect than the status quo.
As for pricing, no observation could possible match the plain facts of the American experience. I suspect the quality of care and patient experience would improve if there were simply massive payments - about 5% of GDP - to providers and pharma and technology companies on the condition that they not induce utilization. It would be the equivalent of paying farmers not to grow crops, only by doing so in health care you would get more food.
Gooz is apparently not retired military. You see, we military retirees are part of the only true national healthcare service in the country. What Medicare B does not pay, DOD Tricare pays. Even my medication is free or deeply discounted. Oh, and no insurance clerk denies may care - with the exception of cosmetic treatments, of course.
As for long-standing access to care arguments against a national healthcare system, that is gaslight. I am the guy sitting next to you in the waiting room to see that specialist at MAYO Clinic. I get the same medical treatment as you do, and I have to sit and wait to see my doctor just as long as you do. However, my surgeries and other treatments are free while yours are pricey - with deductibles and co-pays at every turn.
My spouse is European - they all have free national healthcare in Europe - have since WWII. Of course, private care is an option for rich Europeans. It costs EU governments far less than we sucker Americans pay. And, as Gooz pointed out, them ferriners live longer than we Americans do. A big contributor is way less bureaucratic overhead due to layers of insurance company staff, and healthcare provider staff who have to understand what each insurer will pay for, revise claims and re-submit them, etc. in addition to providing treatments.
So it is ironic, that there already exists all the computer networks and software needed to implement a national healthcare system in the USA - including limits on BIG Pharma price gauging. We just lack the political will to implement a national health insurance agency within HHS (damn those DOGE people :-).
Political will is not exactly the problem. Healthcare makes a lot (a lot!) of money for a lot of people and the healthcare industry has bought and paid for the Congress we have. (If you think high tech has a stranglehold on Capitol Hill, think again.) As long as you can buy elections, healthcare will not change, no matter how many policy people write smart, insightful papers about what’s wrong and how to fix it. (Said a person who has written many smart, insightful journal papers, not to mention magazine articles and opeds.) Campaign finance is the fundamental problem and until we fix that, nothing else will change. Healthcare makes too much money for too many people.
The sad covert message in what you correctly assert is that Democrats are in this corruption as deep as the Republicans. Biden did nothing to get Congress to reverse CU much less impeach some of the corrupt scumbags on SCOTUS who enabled it.. Trump is part of the oligarchy trying to eliminate democracy, so he will not lift a finger to kill it either (Said a retired Deep Stater).
The “tedious work” of rooting out unnecessary care requires a hospitable policy environment. I will address a forthcoming post to that issue.
I’m convinced the only way to control overuse and prices is with global budgeting. Maryland is doing global budgeting lite, but it’s a start. That said, it’s not a panacea. The VA is budgeted and its doctors are salaried and there’s still a lot of overtreatment — but at least it is less than the rest of the system.
It’s not a ploy. It’s a documented, sad reality that a significant amount of medical practice is not based on medical evidence, but is influenced by unscientific forces ranging from outside commercial entities (drug and medical device companies, mainly), physician incentives under fee for service medicine (the more you do the more you make), and individual physician beliefs based on their own experience, which is by definition a limited sample. Universal coverage by a single government entity (Medicare for All) would solve our coverage and excessive administrative costs problems, but wouldn’t undo those perverse incentives incentivizing unnecessary care.
Yup! You said it.
I see it firsthand. Healthcare organizations game the system of value based care to fish for asymptomatic diagnoses to enhance reimbursement for patients in Medicare Advantage plans. There is no evidence that making a diagnosis of asymptomatic stage B heart failure or asymptomatic peripheral arterial disease results in benefit to the patient (in fact, there are well documented harms caused by overdiagnosis). This is supported by good science. This focus on financial outcomes has turned medical professionals who should know better into science deniers.
Agree wholeheartedly. Now if we could only convince the Medicare for All folks that Medicare’s fee for service system and physician compensation systems need reforming, too, if we are going to achieve AFFORDABLE health care for all.
Good luck with that! Medicare for All founders think I’m evil because I think fee for service is a big problem that needs fixing.
Thanks for this walk through memory lane -- a very nice summary of our decades-old debate about the causes of geographic variation in health care cost. All along, the main purpose of studying cost variation by geographical areas has been to use lower cost areas as the existence proof that achieving lower cost is possible. The idea was to find out what works in those areas, and try to do the same elsewhere -- or the reverse, finding out what does not work in the high utilization areas and trying to stop doing those things.
But, it is always useful to step back and realize that when you care about improving our health care system (including improving both health and economic outcomes -- i.e. "value") and you study cost variation, you are implicitly limiting the scope of your search for cost saving opportunities to the structures and processes that already exist in some geographic areas. Cost variation studies do not identify opportunities to reduce cost (or, more importantly, to improve value) through innovation and optimization.
Innovation can take two main forms: (1) improvements in clinical decision-making processes (e.g. superior practice guidelines and protocols that can be determined through modeling, cost-effectiveness analysis, and consensus-building) and (2) improvements in care delivery processes (e.g. the fruits of CQI, TQM, 6 sigma, etc.).
As a fellow traveler in the health care improvement field, I lament the decline in interest in the admittedly tedious work of improvement, optimization and innovation. And I also lament the distraction from that tedious work caused by the continued focus on debating the relative strength of prices or utilization in predicting the cause of existing geographic variation.
I expanded my comment to a post in my blog: https://rewardhealth.com/archives/3740 . Thanks again for your insightful work...
A play on the headline on the Health Affairs article from 2003 by Gerard Anderson & Uwe Reinhardt: “It’s the prices, stupid”. If it was good enough for the late, great Uwe, it is good enough for me to draw attention to a finding that goes against current conventional wisdom, which is that our high health care costs are mainly driven by high prices.
“It’s the profits, stupid.”
The late Uwe Reinhardt and his wife May Cheng designed a non-profit single payer health system, free at the point of service, for Taiwan that provides more care for less cost to the whole population.
He advised them not to allow insurance companies from the start, saving 1/3 of every health care dollar from going to bureaucracy. (Making people “choose” plans makes the patient at fault if they choose wrongly. That’s not health care, its domestic violence)
They pay doctors fee for service. It’s not perfect but beats the alternatives. We all know “there are many ways to pay doctors, none of them very good”.
Instead of overutilization, its oversupply in some sectors driven by the need for profits, and undersupply in some sectors driven by the need for profits.
Drug companies raise their prices because they can. Private equity raises prices and reduces quality because they can. Insurers are not working for patients.
I submit it’s the profits distorting every aspect single aspect of health care.
Overuse of medications is part of this picture. Too often, people over 60 are assumed to have high blood pressure and heart disease and prescribed the corresponding pills. Patients who don't need these treatments or whose conditions could be improved by lifestyle changes risk the corresponding side effects, which are then misdiagnosed as diseases requiring yet more medications.
This is also driven by the financial incentives of HEDIS measures. If that blood pressure is not less than 140/90 your organization will not get a five star rating and that leaves a lot of money on the table. Clinical outcomes and benefits to patients be damned.
Also, most doctor's offices don't take blood pressures correctly by letting the patient sit quietly for a few minutes. This often makes BP look higher than it really is. I complain about this, but get nowhere.
U.S. "utilization" of expensive (and often unjustified) procedures, etc. is much higher than elsewhere. I have some data on that. I bet that's true across US regions. Wennberg showed it way-back-when across Vermont. So it's not just volume of a given basket of services, but variations in the baskets.
I agree that global budgeting and less FFS would help tamp down use of the expensive, low-value stuff. It would be interesting to see if variations across Germany or elsewhere in procedures and expenses are lower than here. As I understand it, there is still FFS in Germany, but only for outpatient work by office practitioners. Physicians in hospitals are paid salaries, and the hospitals have budget limits. And the regional medical societies that handle FFS payments have fixed budgets, so they monitor utilization and withhold payments to overusers to economize.
The belief that variation was driven by price led to simplistic thinking about spending — all you gotta do is bring down prices! But that approach was doomed in a system where a provider could keep revenue from falling by increasing utilization. (Which is a misleading term because it implies the patient, as “user” of medical services, is the one driving what services get paid for.) it has also led to the simplistic notion that increasing the number of doctors will bring down prices and therefore curb healthcare inflation. Mote doctors equals more utilization, without necessarily improving health.
I have some small experience here being a retired internist who worked in academic, public health and private-practice medicine. Excess utilization is probably 85% due to for-profit, fee-for-service medicine and 15% anxious patients and doctors. A doc who gets paid by the procedure be it skin biopsies, appendectomies, cardiac catheterizations, etc. Will look for opportunities to perform more procedures if he/she sees a chance or if he/she is employed will be ‘strongly encouraged’ by the employer to perform more. A well thought out national healthcare system could provide truly great healthcare for about 60% of what we spend now and cover everyone.
But lots of people are making bank on the current system and they don’t want to see a 40% haircut. Hence the persistence of our wasteful, irrational system.
Universal health care and an end of for-profit insurance companies would greatly reduce this problem for us, as it has for decades in civilized countries.
Kindly stop the "overutilization" ploy.
It’s not a ploy, it’s a fact that has been documented over and over and over again. And just because there’s massive underuse of effective treatments doesn’t mean there isn’t overuse and lots of just plain ineffective stuff.
Good writing is good thinking. I could not get through it. Too long.Too gnarled. Too confused
Canadian here, 50 years in the health policy/health services research wars. We, too have variations in cost and utilization, although the way our system is funded makes it pretty much impossible for there to be as much population-level cost differences as between Medicare regions in the US.
There are remedies to all of the perverse incentives and completely unjustifiable practice variations and absurd price variations, but as Shannon Brownlee says (I'm paraphrasing here), we should not sane-wash the story. It's money and politics (now identical in the US), purely and simply.
But as noted, sub-systems like Kaiser and Intermountain Health do manage to deliver good care prudently. They have practice cultures that support it; physicians self-select into such cultures, and therein lies the hope and the problem. It is impossible to change physician practice cultures from the outside; the motivation, and importantly both the authority and accountability, must come from within. I've been in sessions countless times in Canada where some physicians are genuinely curious about practice variations and are worried about being an outlier, and others couldn't care less, some actually proud of their outlier status. Choosing Wisely has done fabulous and sadly ineffective work; medicine seems to require a rethinking of Rogers' Diffusion of Innovation theory because it is devilishly hard to get beyond the early adopters. The vanguard remains the vanguard.
As for malpractice, the evidence suggests that two things are true. One, it is a factor for some physicians, influenced (to some extend understandably) by anecdotes and personal experience. But the whole field is rife with false positives and false negatives, so the one certainty is that there is almost no justice. Second, all of this is remediable: a no-fault system. Of course no-fault is imperfect, but it is infinitely less imperfect than the status quo.
As for pricing, no observation could possible match the plain facts of the American experience. I suspect the quality of care and patient experience would improve if there were simply massive payments - about 5% of GDP - to providers and pharma and technology companies on the condition that they not induce utilization. It would be the equivalent of paying farmers not to grow crops, only by doing so in health care you would get more food.
It’s mostly inadequate taxation.
Over-utilization? By whom? Why?
By providers. Because they can. And it makes money.
Gooz is apparently not retired military. You see, we military retirees are part of the only true national healthcare service in the country. What Medicare B does not pay, DOD Tricare pays. Even my medication is free or deeply discounted. Oh, and no insurance clerk denies may care - with the exception of cosmetic treatments, of course.
As for long-standing access to care arguments against a national healthcare system, that is gaslight. I am the guy sitting next to you in the waiting room to see that specialist at MAYO Clinic. I get the same medical treatment as you do, and I have to sit and wait to see my doctor just as long as you do. However, my surgeries and other treatments are free while yours are pricey - with deductibles and co-pays at every turn.
My spouse is European - they all have free national healthcare in Europe - have since WWII. Of course, private care is an option for rich Europeans. It costs EU governments far less than we sucker Americans pay. And, as Gooz pointed out, them ferriners live longer than we Americans do. A big contributor is way less bureaucratic overhead due to layers of insurance company staff, and healthcare provider staff who have to understand what each insurer will pay for, revise claims and re-submit them, etc. in addition to providing treatments.
So it is ironic, that there already exists all the computer networks and software needed to implement a national healthcare system in the USA - including limits on BIG Pharma price gauging. We just lack the political will to implement a national health insurance agency within HHS (damn those DOGE people :-).
Political will is not exactly the problem. Healthcare makes a lot (a lot!) of money for a lot of people and the healthcare industry has bought and paid for the Congress we have. (If you think high tech has a stranglehold on Capitol Hill, think again.) As long as you can buy elections, healthcare will not change, no matter how many policy people write smart, insightful papers about what’s wrong and how to fix it. (Said a person who has written many smart, insightful journal papers, not to mention magazine articles and opeds.) Campaign finance is the fundamental problem and until we fix that, nothing else will change. Healthcare makes too much money for too many people.
The sad covert message in what you correctly assert is that Democrats are in this corruption as deep as the Republicans. Biden did nothing to get Congress to reverse CU much less impeach some of the corrupt scumbags on SCOTUS who enabled it.. Trump is part of the oligarchy trying to eliminate democracy, so he will not lift a finger to kill it either (Said a retired Deep Stater).