Waste Not, Want Not

A recent commentary in JAMA begins with the sweeping condemnation: “An epidemic of waste blights the US health care delivery system.”Sad as this claim is, it is also encouraging, for who wouldn’t want to get rid of waste? Any attempt at reforming American health care should start by eliminating waste—but to do so, we need to know exactly where to find the waste in the system and how best to dispose of it.

Waste comes in several varieties. A RAND study identifies 3 principal flavors: administrative waste (such as excess expenditures on running a health insurance plan); operational inefficiency (for example, duplication of diagnostic tests); and clinical waste (for instance spending money on expensive drugs when cheaper ones would be equally effective).

A good starting point in thinking about reform would be to enumerate all the types of each of these forms of waste and to put a dollar amount on each of them. It turns out that the McKinsey Global Institute, the economics research arm of the McKinsey management consulting firm, has done exactly this kind of analysis.
In fact, McKinsey first undertook to identify where the waste is in the US health care system using 2003 data and then repeated the analysis with 2006 data. What’s fascinating about the report is both seeing where the waste is and discovering how much has changed in 3 short years.

The McKinsey report compares US expenditures on health care with those of a group of 13 countries belonging to the Organization for Economic Cooperation and Development (OECD). Reasoning that richer countries are more willing to spend money on health care, the report computes the Estimated Spending According to Wealth (ESAW), a prediction of how much a given country would spend if it were like the OECD average, adjusted for per capita GDP. In 2006, the US spent nearly $2.1 trillion on health care, or $6800 per person, eating up 16% of GDP. This was an increase of $363 billion since 2003—and $643 billion more than the average spent in the 13 comparison countries (Austria, Canada, the Czech Republic, Denmark, Finland, France, Germany, Iceland, Poland, Portugal, South Korea, Spain, and Switzerland) after adjusting for per capita wealth, or the ESAW

The excess spending produced no discernible health benefit for Americans. In fact, comparisons of the US health care system to that of OECD peers typically find that the US performed worse than everyone else. On one report card, where 1 is the best score and 6 is the worst, the US managed to achieve scores of 5 or 6 on 5 measures: quality care, access, efficiency, equity, and healthy lives.

The waste, according to the McKinsey Report, is in 5 areas: outpatient care ($436 billion or 68% of the excess), drugs ($98 billion or 15%), administrative costs ($91 billion or 14%), investments in health ($50 billion or 7%), and inpatient care ($40 billion or 6%).

By outpatient care, the Report means visits to physicians’ offices, same day surgery, dental care, and treatment in ambulatory surgical centers, diagnostic imaging centers, and other outpatient clinics. What’s striking is that this is the fastest growing component of wasteful care, growing at 7.5% each year since 2003. The higher costs in this sector are due principally to two factors: how much physicians are paid in the U.S. and the high profit margins for ambulatory surgery centers and diagnostic imaging centers. Extremely generous physician compensation adds $64 billion of costs to the system each year. This reflects what we pay specialists and our extravagant use of specialist care: while generalists in the US are paid somewhat better than their counterparts in the comparison countries, specialists are paid much more highly than in the rest of the developed world. Both ambulatory surgery centers and imaging centers are proliferating rapidly, attracted by operating margins of as much as 25%. The result is that the US has 4 times as many CT scanners and MRI machines as the average OECD country, and does 4 times as many imaging studies each year, again with no measurable benefit in terms of patient outcomes.

Drugs are the second major area of wasted spending (this includes both drugs spent by outpatients and drugs spend by hospitals). What’s interesting here is that Americans actually take 10% fewer prescription drugs than the average OECD patient each year. The source of the waste is that drug companies charge on average 50% more for brand name drugs in the U.S. than elsewhere in the world and Americans use a more expensive mix of drugs (a large fraction of brand name or newly released drugs).

Health care administrative costs are next on the list. Most of this relates to operating expenses and profits among private health insurance companies. The American multi-payer system, far from driving down costs through competition, adds costs to the system in the form of marketing, sales, and management overhead. Even Medicare, which until recently had far lower administrative costs than the private sector, has experienced a rise in costs since 2003 because of payments it makes to private plans to administer the Medicare Advantage Plans and the Part D drug benefit.

Investments in health are also higher than in peer countries after adjusting for per capita wealth. This means the US invests more in public health and basic research than other countries. This is one area where the excess, relative to other nations, may well be beneficial and not wasteful. Whether NIH and state public health departments are spending their money in the most effective way—whether they are getting maximum value for their investment—should be carefully examined.

At the bottom of the list, but still a major source of waste, is inpatient care. What’s fascinating here is that both the number and length of hospitalizations are shorter in the U.S. than anywhere else. The waste stems from the cost per hospital day, which is roughly twice the OECD average. This in turn reflects more spending on high tech equipment and subspecialty care.

At least as interesting as the breakdown of the types of waste is the way the distribution has changed in the last few years. The identical analysis by McKinsey using 2003 data found that by far the largest source of waste was inpatient care, accounting for slightly under half of all the waste. Why has the contribution of hospitalization gone from first to last? The mechanism of reimbursement for hospital care by diagnosis related groups, which gives hospitals a fixed amount of money depending on the reason the patient was admitted rather than a per diem rate, has been in effect for older patients since 1983. What has changed is the availability of a more lucrative alternative—day surgery and treatment in ambulatory surgical centers—for the treatment of conditions such as hernias and cataracts. The move from one site of care to another dramatically demonstrates the tremendous adaptability of the health care eco-system.

The implications for health care reform of this type of analysis are profound. If we truly want to decrease wasteful spending, both short term and long term interventions will be required. If we want to manage the flow of procedures from the hospital to the outpatient setting wisely, we need to regulate the proliferation of ambulatory surgical centers and diagnostic imaging centers and to control what they charge for their services. If we want to affect the balance of specialty and generalist care, it will not be enough to provide incentives to medical students to go into primary care: we will need to markedly decrease the phenomenal rate of reimbursement for specialists. If we hope to decrease waste in the medication arena, we will need to determine whether new drugs are better than old ones and if so how much better. We will need to institute some sort of price control over the pharmaceutical industry, at least by negotiating prices (not currently an option under Medicare Part D). And if we truly want to get rid of wasteful administrative costs, we need to consider a single payer system, something that is currently not even on the table as Congress debates health care reform. Finally, we need to recognize that some of what other countries deem wasteful, such as high tech care near the end of life in exchange for a minute chance of life-prolongation, Americans seem to value. If we want to get rid of this type of expenditure, we will need to change the culture that supports this approach, not merely the economic incentives that further facilitate it.

Is Death Optional?

Just how far attitudes and expectations about aging have changed in the last 60 years hit home on reading an article from the NY Times Magazine from 1950 called “Recharting Life for an Aging America.” The author, a physician, wrote that “To lead a long and happy life falls, for the average citizen, into the same category of irrational wishes as to be a millionaire or a movie star.” The reality, he said, is that most old people are “lonely, poor, ailing, crippled, ugly, [and] mentally and physically deteriorated.” Today, by contrast, older people take the possibility of ever increasing longevity for granted.

The change in perspective is dramatic and it’s very new: while Americans born in 1950could expect to live far longer than their grandfathers did, most of the improvement in life expectancy was due to decreases in infant mortality. It was only in 1970—5 years after the introduction of Medicare—that 65-year-olds could look forward to a longer period of retirement than any previous generation. By 2005, white men could anticipate another 17.2 years of life and white women 20 years.

Is the result really that Americans today fail to accept that death is inevitable? Or do patients appear to believe that death is optional because physicians seldom discuss life’s final stage and continue to offer treatments, even if they are of little or no benefit?

For all the lip service paid to informed consent and joint physician-patient decision making, older patients seldom understand their likely trajectory with and without a particular treatment. I recently saw a dramatic example of this problem in the course of palliative care consultation at a major teaching hospital in Boston.

The patient was a man in his late 70’s who had been hospitalized with a devastating stroke due to massive bleeding in his brain. He was being kept alive in the ICU with a variety of high tech interventions. The attending neurologist told the patient’s wife that the likelihood of any recovery was very small but that the full extent of his improvement might not be known for months. The doctor held out no hope of a full recovery and expected that if the patient did survive, he would require total care and would have little if any language capacity.

The patient’s wife didn’t think her husband would have wanted life-prolonging treatment if he would be left with profound limitations on his functioning, but she wasn’t absolutely sure. She wondered if she should authorize further vigorous treatment to “give him a chance.”

What quickly became clear to me was that the wife’s conception of what it would be like for her husband over the next two months if she opted for attempted rehabilitation and life-prolonging treatment bore little relationship to reality. She imagined that “going to rehab” would be as benign as taking a daily vitamin pill. I explained to her that after transfer to a rehab facility, he would likely suffer multiple complications such as pressure ulcers or pneumonia. He would probably be shuttled back and forth between the rehab facility and the hospital—and after all that, he would either die or be left extremely debilitated. Once she understood both what treatment would entail and how unlikely meaningful recovery was, she had no further hesitation: the right course of action for her husband was to focus exclusively on his comfort.

In today’s medical world, this kind of discussion is rare. If Medicare patients are to get appropriate care, and if costs are to be controlled, physicians must have such conversations. But since the focus is on life-prolongation throughout a physician’s training, with little attention to maximizing quality of life or to deciding when to stop, medical education will need to change.

Medicare and Medicaid pay just under $10 billion per year to hospitals in the form of General Medical Education funds to train residents. But as the Council on Graduate Medical Education observed in a letter to the Secretary of Health and Human Services in May, 2009, hospitals are not held accountable for how they spend the money. Their concern is with their own labor needs, not with training the next generation of physicians to manage chronic disease. It is time to monitor and regulate the way the federal government’s money is spent and require proficiency in end-of-life discussions along with disease management and care coordination.

Some experts believe that telling patients about the trajectory of illness with different treatment options won’t suffice because patients engage in magical thinking: physicians can lay out the various possible scenarios but patients will gamble that they will be the lucky ones who have the best outcomes. My experience suggests that most patients do respond to realistic discussions about their future, but the way to deal with the minority of patients who might want to try a treatment that has a vanishingly small chance of working is simply not to offer such interventions.

Decisions to take certain kinds of treatment in certain situations off the table should be made at the policy level. This will require holding National Institute of Health consensus conferences to determine a new standard of care for patients with a variety of chronic conditions such as dementia or heart failure in the last phase of life. The Centers for Medicare and Medicaid Services (CMS) will then need to give teeth to the practice guidelines that emerge from such conferences by agreeing to reimburse only for treatment that is consistent with those guidelines.

Perhaps the greatest challenge is that policy makers, who will need to endorse the kinds of changes I am suggesting, share the same expectations of ever increasing longevity as other Americans. A good starting point is therefore to limit treatments that are burdensome, unlikely to be effective, and expensive.

The next step will be to dispassionately analyze interventions that offer only a slight chance of benefit and that are expensive but that are not burdensome to patients. Some devices such as pacemakers have become increasingly acceptable as they have become smaller and implanting them has become safer and less invasive. Likewise, some cancers have become chronic illnesses because of the development of relatively non-toxic, targeted therapy. Patients naturally want potentially life-extending treatment if it comes in the form of a pill, without the nausea, vomiting, hair loss, and bone marrow depression associated with conventional chemotherapy.

Ultimately, policy-makers will have to take into consideration cost-effectiveness in deciding whether CMS will cover such treatments. Far less politically charged are the steps that should be taken immediately: regulating spending on graduate medical education and limiting reimbursement for treatment that comes at a high price to both patients and society without conferring any appreciable benefit.

A modified version of this piece appeared on the Health Care Cost Monitor, a blog of the Hastings Center.

Fixing Medicare

The Medicare Modernization Act of 2003 was supposed to bring the Medicare program into the 21st century. It was going to ensure that good health care was a reality for both America’s elderly and its disabled citizens. It didn’t succeed.

The 45 million Americans who are enrolled in Medicare are certainly far better off than the 47 million Americans who have no health insurance at all. Some of them are better off today than they were before the MMA was passed since they now have a prescription drug benefit. In fact, for those elders who are in good health, Medicare is a model program: designed in 1965 to cover acute, time-limited illness, it does that very well. The problem is what Medicare does not do so well. It does not provide coordinated and preventive care for those with chronic illness; it favors institutional over home care; and it offers excellent end of life care only to the minority of patients willing to forgo hospitalization and palliative treatment and to enroll in hospice. And Medicare has no good way to control costs.

When the first of the baby boomers turns 65 in 2010, Medicare costs are expected to reach 3.3% of GDP; they will jump to 6.3% of GDP in 2030 and reach a staggering 8.4% in 2050. Forget all the concern about Social Security—it’s the Hospital Trust Fund, which pays for Medicare Part A, that is on track to go bankrupt. The latest report from the Trustees, hot off the press, projects this will happen by 2017.

What Medicare is best at is treating a disease like pneumonia: the patient gets sick quickly, is hospitalized for at most a week, and then goes home with a prescription for a few days’ worth of oral antibiotics. But Medicare patients today have multiple chronic conditions: the 21% of Medicare beneficiaries with 5 or more chronic diseases account for 68% of all Medicare spending.

Patients with chronic medical problems need a very different model of care. They need a coordinated, integrated approach. Right now one of the few ways to get this kind of treatment is through the Program for All Inclusive Care for the Elderly (PACE), a program for the frailest of the frail--elders who are dually enrolled in Medicare and Medicaid and who are impaired enough to qualify to live in a nursing home to boot. PACE has been very successful not only in keeping such patients out of the nursing home but also at keeping them out of the hospital, while providing high quality care. But the model for addressing chronic disease in the MMA was not the capitated PACE program, but rather “case management,” typically provided by an outside agency that does the medical equivalent of trying to direct traffic by phone rather than through the physician’s office. Not surprisingly, these programs have in general been a disappointment.

Because Medicare is geared towards treatment of acute illness, it is built on hospital-based care, not community care. In 2007, 30% of Medicare spending went to hospital treatment. Much smaller chunks went to skilled nursing facility (SNF) care (5%) and to home care (4%). And there are incentives for patients to be treated in institutions rather than at home. For example, patients must spend three nights in a hospital before going to a SNF, even though some simple problems such as pneumonia could easily be treated in the SNF. Similarly, there is an incentive for patients to move into a nursing home—and be covered by Medicaid—rather than to receive care at home.

One of the jewels in the Medicare crown is its hospice benefit. Enacted in 1982, the hospice benefit allows patients with a prognosis of 6 months or less to receive intensive services focusing on their comfort, care which in 95% of cases is delivered at home. The program has gotten excellent marks from families in satisfaction surveys and in formal research studies.

Hospice grown dramatically: between 2000 and 2007, the number of Medicare certified hospices increased by 41%, and the number of hospice patients doubled from 513,000 to one million. But the problem with Medicare hospice is that it forces patients to make a diabolical choice. In order to qualify for the home care services most patients want at the end of life, they have to agree to forgo treatments that can offer significant palliation. Contemporary medicine can enhance the quality of life for many patients with advanced disease through relatively non-invasive treatments such as oral chemotherapy or blood transfusions. But the reimbursement structure of the Medicare hospice benefit—a fixed per diem rate—simply does not allow for these treatments.

How can Medicare do all these things—and continue to provide acute medical care? Providing additional benefits seems like the last thing the Medicare program should do: the costs of the Medicare program have already been skyrocketing, partly due to the growing number of older individuals, but to a much larger extent due to the insatiable American appetite for health care and the introduction of new, expensive technology. Fortunately, the reality is that while Medicare is failing to provide a variety of services that are critically important for older patients, it is simultaneously providing an enormous amount of care that is useless and in many cases even harmful. In fact, when Medicare patients with a heart attack, hip fracture, or colorectal cancer were followed over a five year period, those living in parts of the country with higher spending on medical care experienced higher mortality.

Medicare routinely pays for burdensome, expensive treatments for patients at the end of life. Similarly, it reimburses physicians and hospitals generously for diagnostic tests and procedures of dubious benefit. And it pays for costly medications and treatments when cheaper, equally effective treatments exist. How can Medicare move from today’s reality, in which it fails to provide all kinds of care it should offer and systematically encourages the use of all kinds of care it should not?

In terms of chronic disease, the secret to success lies within the PACE program, which provides coordinated care within a capitated system. HMOs got a bad name in the 1990s, but the truth is that only when an integrated health care system operates within a fixed budget that we can expect to see appropriate allocation of resources. With respect to new technology, which is the principal driver behind escalating costs in the Medicare program, the trick will be to stimulate innovation without allowing technology to diffuse unchecked.

One solution is to allow cost effectiveness analysis to enter into CMS reimbursement decisions, not as the sole criterion, but along with other ethical principles such as preferential treatment for the most vulnerable. Finally, to provide good end of life care to all Medicare patients who die, not just those who currently opt for hospice, many of whom enroll in the program within days or even hours of death, we need to create a new benefit. This would provide much of what is currently available through hospice but allow for some hospital care and many palliative treatments in exchange for forgoing the most expensive types of care such as major surgery and ICU care.

The current discussions of health care reform have appropriately emphasized the importance of universal access. And right now those over 65 do have access through Medicare—though median out-of-pocket health spending as a percent of income has been rising for older individuals, going from 11.9% in 1997 to 16.1% in 2005, potentially jeopardizing access. But Medicare deserves significant attention as well, both to quality and costs, two goals that are sometimes in conflict. The good news is that truly modernizing Medicare—paying attention to the most important health needs of older individuals and focusing on care that works—can actually improve quality while constraining cost.

This article also appeared in the new Hastings Center Blog, the Health Care Cost Monitor.

Follow the Money?

Most Americans have probably never heard of it, but MedPAC is arguably one of the most influential organizations in the health care arena. The Medical Payments Advisory Commission is a non-partisan, independent Congressional agency established by Congress in 1997 to advise on issues relating to the Medicare program. That translates mainly into advice on reimbursement policies, but MedPAC’s mandate also includes addressing access and quality of care.

What is MedPAC and just what does it do? It is comprised of 17 commissioners, including a chairman, who serve staggered 3-year terms. They are appointed by the Comptroller General—another important position that most of us have never heard of. While the 17 members of MedPAC are a distinguished group of professionals who come from diverse fields including medicine, nursing, health policy, and economics, they all have other jobs and could not possibly carry out their mission without a strong staff to do the heavy lifting. In fact, MedPAC’s website lists an executive director, an associate director, a deputy directory, 8 principal policy analysts, 9 senior analysts, 2 analysts, and 2 research assistants, along with miscellaneous other aides and consultants. Based on my experience as a member of the Massachusetts Public Health Council, the supposed seat of health care policy in the state, it is the staff that does most of the work and holds the real power.

The work of MedPAC is evident in its “Reports to Congress,” which appear in March and June of each year, as well as in an annual Data Book. The most recent Report, released in March 2009, all 424 pages of which are available on the web, gives some indication of the breadth and depth of MedPAC’s work. The introduction by Chairman Glen Hackbarth (who incidentally is a founding member of the multi-specialty group practice where I work, Harvard Vanguard Medical Associates), sets the scene. Hackbarth identifies 5 major imperatives for Medicare reform: redesigning and rebuilding primary care, moving beyond fee for service to a more integrated and coordinated model of care, revamping the Medicare Advantage program to reward excellent performance, working to constrain costs by modifying the reimbursement system, and investing in comparative effectiveness research.

To get a flavor of just how far MedPAC goes in its recommendations, consider just 3 of its specific suggestions, those dealing with updating the payment system, revising the Medicare Advantage Program, and modifying the reimbursement system for hospice. Every year, MedPAC tells Congress what changes to make in how much Medicare pays for a variety of services. One of the areas the report addresses this year is payments for expensive imaging services—payments for MRI and CT and PET scan studies. Hidden behind its very dry language, MedPAC does something quite radical: The Commission recognizes that its system for deciding how much to pay for such procedures has been based on the assumption that the equipment is operated 25 hours/week. As a result, providers have an incentive to purchase expensive machinery, even if they have only modest needs, but then to use it as much as possible. The latest report advises modifying the reimbursement formula by assuming that equipment is in operation many more hours each week, thus decreasing the per scan reimbursement and potentially slowing the rapidly rising number of imaging studies ordered each year.

A second area tackled by MedPAC is the Medicare Advantage program. To encourage older individuals to sign up for a private plan rather than the government program, third party payers have been encouraged to come up with capitated plans as alternatives to conventional fee for service Medicare. Some of these plans offer coordination of care and a truly integrated model of health care, which are widely held to be desirable for older patients. Others don’t offer such a comprehensive program but nonetheless receive roughly 14% more from Medicare than do fee-for-service plans providing comparable care. MedPAC wants to make sure that it’s getting value for its money by eliminating what it sees as the windfall offered to capitated programs.

Finally, the report discusses Medicare hospice reimbursement, which has been essentially unchanged since the hospice benefit was introduced in 1982. Between 2000 and 2007, about 1000 new hospice providers entered the market, almost all of them for-profit agencies. The Commission recognizes that many of these hospices are making a sizable profit by enrolling lots of long stay patients: Hospices are paid a fixed per diem rate, so if they care for many low-maintenance patients over an extended period of time, they make money. The new proposal is to pay hospices a higher daily fee initially, when the hospice spends a disproportionate amount of time and effort evaluating a patient and providing whatever medications and equipment the patient needs, then pay a lower fee for intermediate days, and pay a higher fee for the last few days of life, when resource utilization goes up. While this approach is entirely rational as a way to prevent hospices from bilking Medicare by, for example, enrolling nursing home patients with dementia for long periods of time, it has the potential to further discourage hospices from enrolling cancer patients who are interested in pursuing palliative but expensive treatments such as radiation therapy or oral chemotherapy.

MedPAC’s suggestions are based on an extensive analysis of Medicare data—data which are published in its annual data book. They are often very reasonable strategies to improve the existing system of care. But while the Commission has an excellent grasp of the context within which reimbursement occurs and professes interest in developing a correspondingly broad set of recommendations, its concrete proposals tend to deal fairly narrowly with payment issues. The main job of the Commission, after all, is to advise on Medicare payment.

Proposals for reforming America’s health care system are multiplying faster than any other type of innovation in medicine—in fact, I haven’t had written a blog posting in some time because each time I prepare to respond to one plan, another one appears. The New England Journal of Medicine, Health Affairs, and the Annals of Internal Medicine have all featured numerous articles on health care reform. One piece just published this month, emanating from something called the FRESH-Thinking Project, boasts a record 50 authors. Most of these articles, like MedPAC, focus on reforming the reimbursement system. They assume that financial incentives drive medical practice. And they are of course right to follow the money, as Deep Throat famously told journalist Bob Woodward. But important as finances are, and insightful and pragmatic as MedPAC is, there is more to health care reform than modifying the payment system. The payment system is essentially the same throughout the country and yet there is enormous variation in the way medicine is practiced. Very little of that variation is due to differences in how sick people are in New Jersey (the highest spending area of the country) and North Dakota (the lowest spending area). The root cause of variation is differences in the culture of medicine. It is the sociology of medicine that we must understand before turning to MedPAC to implement change in the reimbursement system.

A Tale of Two Patients

The primary caregiver for her three grandchildren, 59-year-old Lola Sanchez tried unsuccessfully to go to the kitchen to prepare a snack for the four-year-old and found something was terribly wrong with her right leg. She managed to call an ambulance, but by the time the paramedics arrived, Mrs. Sanchez could no longer speak distinctly and her entire right side was paralyzed. Her blood pressure and her blood sugar were sky high. When she reached the hospital emergency room, she was in a coma. Two days later she was dead, a victim of a massive intracerebral hemorrhage, caused by untreated high blood pressure and inadequately controlled diabetes. Mrs. Sanchez had no health insurance.

In the intensive care unit of the same hospital, Samuel Wang, a 92-year old man with advanced dementia, lay curled up in an ICU bed, dependent on a ventilator to breathe. He had been brought in from a nursing home two weeks earlier with pneumonia. Mr. Wang, who could no longer speak or recognize his family, had aspirated—his food had gone into his lungs, a common occurrence in the final stage of Alzheimer’s disease. Because his family asked the physicians to “do everything” to prolong his life, he remained attached to the ventilator, receiving artificial nutrition through a feeding tube in his stomach. A pacemaker helped keep his heart going. One month after admission, he died after an unsuccessful attempt at cardiopulmonary resuscitation. Mr. Wang was enrolled in Medicare, which together with his supplementary medical insurance, paid the entire $125,000 cost of his hospital stay.

These two scenarios are far from uncommon. According to a recent Urban Institute report, 27,000 Americans died of preventable causes because they lacked medical insurance in 2006. Since most people like Mrs. Sanchez with high blood pressure are asymptomatic, they often do not visit the doctor if they are uninsured. But over the long run, untreated hypertension predisposes to stroke. In the same year, according to researchers at the Dartmouth Institute for Health Policy and Clinical Practice, Medicare spent $10 billion on non-beneficial care for elderly individuals with chronic disease such as Mr. Wang. Expenditures on diagnostic tests, physician visits, and hospitalization are three times higher in some areas of the U.S. than in others, without resulting in any better outcomes.

The current administration hopes to help people like Lola Sanchez by increasing access to care. Access is critical: fully 75 million adult Americans are uninsured or under-insured, resulting in the U.S. coming in last among 19 industrialized nations in the rate of preventable deaths, according to a new analysis by the Commonwealth Fund. But it is irresponsible to improve access, adding to the total government expenditure on medical care, without simultaneously addressing its cost. Currently, Medicare and Medicaid alone account for nearly 5% of GDP and Peter Orszag, Director of the Office of Management and Budget, has projected this will rise to 20% by 2050 unless we take dramatic steps to curb escalating growth.

In the move toward health care reform, cost has received short shrift except to stimulate exhortations to limit waste and inefficiency. Waste—ordering duplicate diagnostic tests because of a lack of an electronic medical record, or prescribing expensive brand name medications instead of far cheaper generic equivalents—makes a modest contribution to spiraling medical costs. The main culprit, according to most medical economists, is the American obsession with high tech medicine. Physicians, patients, and families believe that more is better. The faith in technology is further fueled by device-manufacturers, pharmaceutical companies and the media, as well as by our health care reimbursement system. As health care reform proceeds, we should focus on access, quality, and cost. That will mean using our technology selectively in those who have a reasonable chance of benefiting. It will mean changing the medical culture to ensure that patients nearing the end of life do not routinely undergo pacemaker insertion and are not regularly admitted to the ICU, but instead receive competent and compassionate palliative care.

Movies, Restaurants, Hotels—and Now Nursing Homes

With considerable fanfare, the Centers for Medicare and Medicaid Services (CMS) released a new rating system for nursing homes in mid-December. Depending on your perspective, the state where I live, Massachusetts, either did very well—it was among the top 10 states in the US—or not so well—it has a lower percentage of five-star and a higher percentage of one-star nursing homes than neighboring New Hampshire, Connecticut or Maine.

All rating systems are subject to criticism and this latest one is no exception. For some time, CMS has published Nursing Home Compare, which allows consumers to see how a particular nursing home scores using a variety of indicators. The new approach tries to boil down all the assessments to a single summary statistic. That statistic (the number of stars) in turn depends on just three measures: the result of health inspections, the staffing ratio, and a quality measure. Arguably the most important—and controversial—of these is the quality measure. For long stay nursing homes, the rating system uses 7 different measures to come up with its rating, ranging from the percent of residents who report untreated pain (a good measure but dependent on self-reporting by the facility) to the frequency of urinary tract infections (of dubious importance as many nursing home residents have bacteria in their urine that is of no significance). For short stay facilities (rehab or post-acute care), the rating system uses only 3 different measures to derive its composite quality rating: the presence of acute confusion (delirium), pain, and pressure ulcers. None of the three is corrected for the severity of illness of the patients in the facility. It’s not clear to me that this simplified rating system is an improvement over the previous more nuanced reports. But what is indisputable is that nursing homes in Massachusetts vary enormously. Facilities awarded five stars are probably pretty good and those with one star are probably pretty poor. What, then, should the state do to promote better quality?

The prevailing approach to ensuring quality relies on an extensive system of federal regulations that are enforced by the state Department of Public Health. Teams of surveyors make unscheduled inspections to determine whether facilities are in compliance with the regulations and issue citations for any “deficiencies.” The results of these surveys are public and may result in penalties ranging from fines to loss of Medicaid and Medicare certification. Nursing home quality has improved over the past 10 years, and the regulations probably played a role in stimulating change, particularly when combined with a mandatory resident assessment system, but clearly there is more work to be done.

How should Massachusetts promote further improvement? Perhaps it is time to move from a punitive system to one that offers incentives for achieving quality. An interesting experiment that bears watching is underway in Minnesota, which has introduced pay-for-performance into nursing homes. But pay-for-performance tends to encourage institutions to concentrate only on those areas in which they know they will be measured, to the detriment of other areas. And by rewarding facilities for outcomes rather than for improvement, they decrease reimbursement to precisely those sites that need an infusion of funds to improve.

Over the long run, Massachusetts can hope to improve nursing homes by making a career in long-term care attractive. Physician interest in nursing home care has grown, though modestly: medical directors of nursing homes now have their own professional society and an academic journal. Nurse practitioners are playing an increasing role as primary care clinicians in the nursing home, where they have contributed to better medical care and decreased hospitalization rates along with a high degree of family satisfaction.
The last frontier is the nursing assistant, who continues to be poorly paid, to have limited opportunities for advancement, and to suffer from high rates of job-related injury.

The Massachusetts Act to Promote Cost Containment, signed into law in August, 2008, commits the state to a major effort to attract primary care physicians and nurses through enhanced educational opportunities and loan forgiveness programs. We need to broaden that initiative by developing a career ladder for nursing assistants, creating a variety of positions between the Certified Nursing Assistant (who typically receives 75 hours of classroom training and 100 hours of on-the-job training) and the Registered Nurse (who may have spent 4-5 years getting a Bachelor of Science in Nursing). Only when all those caring for nursing home residents take pride in their work, when they receive respect for what they do and have autonomy in their jobs, can we expect both quality of care and quality of life to improve in nursing facilities.

A shorter version of this posting appeared on Commonhealth

Don't Just Do Something, Sit There

All over the country, hospitals are setting up “rapid response teams.” The idea is to intervene quickly when a patient looks as though he might be going downhill—for example if his blood pressure is falling or he’s breathing very rapidly. The expectation is that this preventive approach will avoid cardiac arrests, emergencies in which a patient’s heart stops and respiration ceases. Massachusetts recently passed a law that requires hospitals to put rapid response teams in place (The Act to Promote Cost Containment, Transparency, and Efficiency in the Delivery of Quality Health Care). The only problem is that there is now pretty good evidence that the teams don’t save lives.

A study in this week’s Journal of the American Medical Association is the first large, carefully conducted study of the effect of a rapid response team, taking into consideration normal seasonal variability in the rate of cardiac arrest and death. Carried out at a medium sized tertiary care hospital in Kansas City, Missouri, the investigators found there was no decrease in the frequency of cardiac arrest after the intervention was introduced and no change in the mortality rate at the hospital.

What was particularly striking about the study is that at first glance, it looked as though the rapid response teams were effective: the crude code rate (number of cardiac arrests per 1000 hospital admissions) fell from 11.2/1000 to 7.5/1000. But when the physicians carrying out the study adjusted for normal month-to-month changes in the frequency of cardiac arrests, the differences vanished. Failure to look at the consequences of rapid response teams over a long enough period of time and to calculate the effect of seasonal changes may have accounted for the positive results in earlier, preliminary studies.

The other startling finding in this study is that of the 70 patients who died despite the rapid response team interventions, fully 46 decided on a do-not-resuscitate status after their evaluation. In other words, the rapid response team stimulated a discussion among physicians, patients, and families about the fact that the patient was very ill and doing poorly. The result of this discussion, in many cases, was an explicit decision to limit invasive and painful interventions that had only a small chance of success.

What can we learn from this provocative study? The first is that it’s a bad idea to institute sweeping changes in medicine without good evidence that the changes will have the desired effect. Several physicians expressed skepticism about rapid response teams when they were becoming the vogue (for example, "Rapid Response Teams—Walk Don’t Run," JAMA 2006). A review of the subject done by the Cochrane Collaborative, a group that undertakes systematic reviews of all kinds of questions in medicine to determine whether the preponderance of evidence support their use, found no evidence of benefit from rapid response teams. But despite these calls for caution, the Institute for Healthcare Improvement recommended that all hospitals adopt rapid response teams. The intervention may turn out to be more effective than the current study suggests—the JAMA study was at a single hospital and used a particular combination of two ICU nurses and a respiratory therapist with ICU physician backup; other institutions using other types of clinicians may achieve different results. But what is clear is that sweeping policy changes in medicine, changes that involve many resources and great expense, should be preceded by correspondingly extensive evaluation.

The second conclusion to be drawn is that the best time to engage patients and families in advance care planning—talking about what approach to medical care they want if they are extremely ill—may not be when they are doing well and may not be when they are in the middle of a crisis. Rather, the best time to consider what they hope treatment will accomplish for them, and what treatments are consistent with their goals, may be when they have just come through a serious illness. We know, for example, that patients are particularly susceptible to advice to stop smoking right after they had had a heart attack. That, of course, is a bit late, but a recent study found that after any hospitalization, whatever the medical problem, patients are good candidates for giving up smoking (Rigotti et al, “Smoking Cessation Intervention for Hospitalized Smokers," Archives of Internal Medicine, October 2008). While it would be premature to conclude that advance care planning is best done right after a close call—just as it was premature to conclude that rapid response teams are the way to go based on very preliminary data—it’s an area to explore further.

Medicare for More

The next administration will have an historic opportunity to reform the American health care system. The federal government might actually do something about the fact that 45 million Americans are uninsured, that health care costs are soaring (with spending on Medicare and Medicaid alone now accounting for 4.6% of GDP and on track to reach 20% by 2050), and that despite our extraordinary level of expenditure on health care, the U.S. ranks in last place among 19 industrialized nations in terms of quality of care (see my posting ‘F’ is for Failure on 7/22/08). Unfortunately, neither Obama nor McCain has put forward a plan that is likely to solve our problems.

What would fix the situation would be to expand Medicare to cover all Americans, as proposed by Senator Edward Kennedy (see “Kennedy and Dingell Fight for Medicare for All,” http:/kennedy.senate.gov/newsroom/press). This approach has the potential to insure everyone while reducing costs and enhancing quality. And it would finally bring the U.S. in line with all other developed nations: countries such as Australia, England, France, Germany, and Canada all provide some form of mandatory universal health insurance for their citizens. They also all have lower infant mortality rates, lower rates of preventable death in people under 75—at a per capita cost half that of the U.S.

When Congress created the Medicare program in 1965, it acted in the belief that older people were somehow exceptional—they were sicker, they lived on fixed incomes, and they did not have employer-based health insurance. While some physicians, politicians, and economists hoped that Medicare would be the wedge opening the door to health insurance for all, Medicare was passed precisely because it did not promise mandatory health insurance (see the chapter, “Medicare for the Middle Class” in David Rothman’s insightful book, Beginnings Count: The Technological Imperative in American Health Care, NY: Oxford University Press, 1997). Single payer insurance was touted then and continues to be seen today as “socialized medicine,” but the expansion of Medicare does not imply a government-run system. While Medicare is publicly financed, it is a private health care system administered by private intermediaries that gives patients an extensive array of choices of physicians and hospitals.

Ironically, there is one part of the health care system in which government is actually in the business of providing medical care, and it’s a part of U.S. health care that McCain vigorously supports. That’s the Veterans Health Administration. The VHA operates the largest integrated health care system in America, which includes hospitals, outpatient clinics, nursing homes, and rehabilitation facilities. A uniform medical benefits package is available to all veterans and covers primary care, outpatient and inpatient services, and prescription drugs. Additional benefits, such as nursing home care and dental care, are available to some vets, depending on their “priority level.” The VA system is known for its pioneering work in managing chronic conditions, for its comprehensive electronic medical record, and for other quality improvement measures.

No one is recommending expansion of the VA system—it’s just not a politically tenable solution. But expanding Medicare, while clearly a difficult sell, would make a great deal of sense. Medicare is far more efficient than private health insurance plans: Medicare’s overhead is about 2%, whereas private insurers take an average of 13% of premium dollars for overhead and profit, with large managed care plans taking as much as 30% (see David Himmelstein and Steffie Woollhandler, “Why the US Needs a Single Payer Health System,” www.pnhp.org/facts/why_the_us_needs_a_single_payer_health_systemphp). Not only would it be simple and efficient, but paradoxically, the existing Medicare program would do a better job serving the non-elderly than it does with those it currently covers.

Medicare was established to cover acute, time-limited illness. By far the largest component of Medicare expenses continues to be for hospitalization. Of the $402 billion spent by Medicare in 2006, 29% went to inpatient care, compared to 15% for physicians, 12% for outpatient drugs, and 3% for home health care (see the MedPac report, www.medpac.gov/documents/Jun07DataBook_Entire_report.pdf). Medicare was designed to address a disease such as pneumonia in which the patient rapidly develops a significant illness, is hospitalized for a week or so (covered after a deductible), and is then discharged home to complete his treatment by taking a few days’ worth of oral antibiotics. By contrast, the typical Medicare patient today has multiple chronic conditions, which are best cared for using a model of chronic disease management: 75% of the elderly have at least one chronic disease and 50% have two or more chronic illnesses. While the Medicare Modernization Act of 2003 addressed some of the needs of today’s older patients, principally by offering a prescription drug plan, the program is still heavily weighted toward the treatment of acute illness. Its incentives, for example, promote hospital care rather than treatment in the home or the nursing home (see chapter 4, “The Trouble with Medicare,” in my book, The Denial of Aging: Perpetual Youth, Eternal Life, and Other Dangerous Fantasies, Cambridge, MA: Harvard University Press, 2006). But this focus on acute care is precisely what most younger, healthier patients need. Some middle aged individuals have congestive heart failure or chronic obstructive pulmonary disease and similarly, some children suffer from chronic conditions such as asthma or diabetes; the majority do not.

The most rational approach to American health care reform is to offer Medicare to everyone, perhaps the existing plan for younger Americans and a modified version for the elderly and the disabled. The U.S. should guarantee health insurance by providing a basic insurance plan (Medicare) paid for out of tax revenues. Patients could choose to exchange their Medicare benefit for a private plan or to supplement their basic plan with a more comprehensive plan for which they would pay directly. A new, expanded Medicare program would be ideally positioned to address the other pressing issue that both Congress and the presidential candidates have largely ignored—the soaring costs of care (see my blog posting, “Going for Broke” on 12/28/2007) by controlling what medical interventions it is willing to cover and how much it will pay for them.

Massachusetts Health Care Reform--Act 2

Why isn’t everyone talking about the new Massachusetts Health Care Reform law? Is it that the Governor signed the legislation into law during the dog days of summer? Is it that the act, which introduces cost containment measures and quality improvement measures, isn’t a single issue bill like the first health care reform law, which expanded coverage to almost all Massachusetts residents?
The “Act to Promote Cost Containment, Transparency and Efficiency in the Delivery of Quality Health Care,” (S2863) is an important piece of legislation which should be getting a great deal more local and national attention than it has. But for all its virtues, it also has some major flaws—and it won’t make much of a dent in the skyrocketing cost of health care.
The law calls for two new programs: a pharmacy drug detailing program and a health care workforce center. The detailing program is modeled on an intervention proposed by Harvard researchers Jerry Avorn and Stephen Soumerai 25 years ago: they wondered whether the same kind of clever strategies used by drug companies to promote their wares could be used to provide physicians with accurate information about the safety and cost-effectiveness of drugs by using trained pharmacists as “un-sales reps.” Their 4-state randomized trial found that academic detail men were accepted by the overwhelming majority of physicians—and that the program saved $2 for every $1 in costs (Jerome Avorn and Stephen Soumerai, “Improving Drug-Therapy Decisions Through Educational Outreach. A Randomized Controlled Trial of Academically Based ‘Detailing,” New England Journal of Medicine 1983; 308: 1457-63). With the new health reform law, the Massachusetts Department of Public Health has been charged with arranging face to face visits to “inform prescribers about drug marketing intended to circumvent competition from generics.” How effective this strategy will be in 2008 is unclear, now that drug companies are not only targeting physicians but are also pouring money into direct-to-consumer advertising.
The law also calls for the establishment of a Health Care Workforce Center whose main purpose is to increase the number of primary care physicians in the state. Specifically, the program will set up a loan repayment program for doctors who go into primary care. A related part of the bill requires the University of Massachusetts Medical School to increase its enrollment, to add residency slots for primary care, and to waive tuition for applicants who agree to practice in under-served areas. Taking steps to enhance primary care is laudable, but as demonstrated in the recent Institute of Medicine Report, Retooling for An Aging America: Building the Health Care Workforce (see my blog entry, “the Boomers are Coming, the Boomers are Coming,” from May 9, 2008), what we desperately need is not just primary care physicians and nurses, but also a diverse array of individuals equipped to care for our growing geriatric population.
One of the few provisions of the new law that did garner quite a bit of attention is the “gift ban,” which requires health care providers to publicly report any gifts they receive from pharmaceutical or medical device manufacturing companies and which bans certain kinds of gifts altogether. Drug companies protested loudly, but as Dr. Jerome Kassirer argued in his book, On the Take: How Medicine’s Complicity with Big Business Can Endanger Your Life ( NY: Oxford University Press, 2005), the standards promulgated under the law constitute are not radical or draconian: they simply represent a basic, ethically justifiable set of guidelines for corporate and professional conduct.
Massachusetts Health Reform, Act 2 contains a hodgepodge of other provisions designed to improve quality and efficiency of care. It requires hospitals to develop rapid response teams for “deteriorating patients,” a measure that could lead to the installation of “panic buttons” in every patient room—not necessarily a good idea. The concerns of families need to be respected and addressed, but surely it should be professional judgment and not anxious families that dictate the summoning of an emergency response team. The act will require hospitals to implement computerized physician order entry systems by 2012 and electronic medical records by 2005—which is probably a good thing, but not as well-supported by hard evidence as I would like. As Drs. Pamela Hartzband and Jerome Groopman argue in their essay, “Off the Record: Avoiding the Pitfalls of Going Electronic” (New England Journal of Medicine 2008; 358: 1656-8), electronic medical records can “constrain creative clinical thinking” and computers can “become a barrier between patients and physicians.” And the act calls for new initiatives in end of life care and in home care—laudable but at this point vague and without substance.
All these components of the new law focus on improving the efficiency and quality of medical care. The only measure that seeks to control costs by actually changing the way we do things in medicine, not merely by ensuring that we do what we have been doing but with greater efficiency, is the requirement that physicians wishing to build ambulatory surgery centers apply for and receive a “Determination of Need” certificate. The engine that drives costs is technology and right now hospitals and medical groups can build new outpatient centers for doing procedures with essentially no restrictions. And in medicine, if you build a new machine, it will be used, regardless of whether one more scanner or surgical suite actually improves the population’s health. Dr. John Wennberg of Dartmouth, who has devoted his career to the exploration of regional variations in American health care, has found repeatedly that the number of elective procedures in various parts of the country depends not on need but on the capacity to perform those procedures (see for example John Wennberg and Alan Gittlesohn, “Small Area Variation in Health Care Delivery,” Science 1973; 182: 1102-8). Controlling the untrammeled growth of technology by evaluating the need for the centers that house that technology has the potential to have an enormous effect on the future cost of medical care. The caveat is that the legislation needs to have teeth, and it is unclear how the requirement that ambulatory surgical centers demonstrate “need” will play out: how is “need” to be defined and measured? Will the cost of the center be a consideration or if there is “need” (read “demand”), is any cost acceptable? Unfortunately, current Massachusetts Determination of Need regulations for hospitals include no such considerations.
Massachusetts Health Care Reform—Act 2 is an important step in the right direction. But if we want to truly change the way health care is delivered and provide high quality care at an affordable cost, we better start working on Massachusetts Health Care Reform—Act 3.

"F" is for Failure

Federal Reserve president Ben Bernanke stood in front of the Senate Finance Committee a month ago and delivered some bad news: the cost of health care is spiraling out of control. And costs will continue to “rise relentlessly,” he said, unless Congress substantially overhauls the health care system (Robert Pear, “Fed Chief Addresses Health Care and Its Cost,” New York Times, June 17, 2008), which it has shown no inclination to do.

At the same time, Bernanke pointed to two other problems with U.S. health care: access and quality. It is these two areas that get most of the attention from lawmakers. Just how poorly the U.S. is doing in these two domains was emphasized yet again in a report released last week by the Commonwealth Fund. The results of the “National Scorecard on U.S. Health System Performance, 2008” are shockingly poor. Lumping all 37 indicators of quality devised by the Fund into one measure, the U.S. scored a 65 out of 100 (down from 67 in 2006). (“Why Not the Best? Results from the National Scorecard on U.S. Health System Performance, 2008,” available at www.commonwealthfund.org.) I'd call that a failing grade.

In terms of access, the average score was 58, with 75 million working age adults—42% of the population—either uninsured or underinsured, up from 61 million (35%) in 2003. The direct consequence of lack of coverage is that the U.S. is now in last place among 19 industrialized nations in terms of deaths that could have been prevented with timely and effective care. In terms of quality, only 41% of adults with hypertension were adequately treated—and only 21% of those with hypertension who had no health insurance.

What continues to get relatively little attention is Bernanke’s first point, the high cost of health care. The Commonwealth report notes that the U.S. spends twice as much per capita as other major industrialized countries on health care, though it fares worse on virtually all outcome measures. Even within the U.S., higher levels of spending often translate paradoxically into lower quality care: among Medicare patients treated for heart attacks, hip fractures, or colorectal cancer, the regions of the country with the lowest mortality rates also had lower total costs.

The presidential candidates say laughably little about health care costs. A side-by-side comparison of their statements on health care reveals only a few points about cost. The democratic and republican proposals are limited, unimaginative—and remarkably similar (see the analysis by the Henry J. Kaiser Family Foundation, “2008 Presidential Candidate Health Care Proposals: Side-by-Side Summary,” at www.health08.org.)

Both Obama and McCain advocate malpractice reform and greater competition among insurance plans. Both candidates allude to the high cost of prescription drugs and favor encouraging the use of generics, and both talk in general terms about the need for increased attention to preventive care and the treatment of chronic conditions. These are all important issues but they will not solve the problem of the high cost of care. Obama specifically advocates investing in electronic medical records and health information technology (to improve efficiency) and McCain wants to give consumers more information about treatment options (in the naïve hope that they will choose less expensive care). But neither talks about the real culprit—the excessive use of high cost technology, even when it is of little or no benefit (see for example Kenneth Thorpe et al, “Which Medical Conditions Account for the Rise in Health Care Spending? Health Affairs, August 25, 2004).

The New York Times, by contrast, is finally beginning to understand the role of technology in driving up the cost of medical care. Over the last month, the Times has featured an article about the use of Avastin (Bevacizumab), a form of chemotherapy costing as much as $100,000/patient/year (Gina Kolata and Andrew Pollack, “Costly Cancer Drug Offers Hope, But Also a Dilemma,” New York Times, July 6, 2008) and another article about the use of an implantable defibrillator in a 99 year old woman (Anemona Hartcollis, “Rise Seen in Medical Effort to Treat the Very Old,” New York Times, July 18, 2008). But both articles wistfully conclude that we are facing a heart-rending dilemma, what the journalists view as an insoluble conflict between the legitimate wish of sick patients to get better and the societal need to constrain costs.

In fact, there is a perfectly reasonable solution: physicians should be restricted in their use of expensive technology to situations in which it has been demonstrated to be beneficial; and Medicare should set reimbursement for high tech interventions at a level reflecting their cost-effectiveness. In the case of Avastin, for example, it may be rational to prescribe the drug for those forms of cancer for which it has been shown to be beneficial, even when the benefit is the prolongation of life by only several months, but not for other forms of cancer for which efficacy is entirely speculative. Moreover, Medicare should set reimbursement at a rate commensurate with benefit, as is done in Australia. When this has been done in the U.S., as when the Centers for Medicare and Medicaid set the reimbursement rate for the left ventricular assist device (an invasive, expensive, but occasionally modestly effective means of treating advanced heart failure) well below the manufacturer’s charges, the rate of use stayed very low. In the case of the defibrillator/pacemaker, which in the Times example was inserted to prevent symptoms of dizziness and weakness, it would have sufficed to implant a pacemaker (cost $11,712 in FY 2005). There is no need to deprive a patient of an effective treatment that will ameliorate symptoms simply to control costs. The problem is that the patient was given a combination defibrillator/pacemaker, a sophisticated device intended to prevent sudden death as well as to counteract a low heart rate—more than doubling the cost ($28,442 in FY 2005) without conferring any advantage in terms of quality of life. The total annual spending on implantable defibrillators in the U.S. is over $1 billion/year, some of which is clearly beneficial, but some of which is not.

Improving access and quality, while tremendously important, will just exacerbate the cost issue if we tackle them without simultaneously addressing cost. It is time for Congress, the Administration, the presidential candidates, and the American people to stop burying their heads in the sand. U.S. health care just got a failing grade: if you sent your child to an expensive private school and he came home with F’s and D’s on his report card, would you blithely and unquestioningly continue to fork out exorbitant tuition payments because the headmaster assured you the school was the best in the world?