Ktismatics

17 April 2013

I’m Shocked, Shocked

Filed under: Culture, Reflections — ktismatics @ 7:16 pm

…to find that US hospitals make more money by fucking up than by doing it right. From this NYTimes article:

Hospitals make money from their own mistakes because insurers pay them for the longer stays and extra care that patients need to treat surgical complications that could have been prevented, a new study finds. Changing the payment system, to stop rewarding poor care, may help to bring down surgical complication rates, the researchers say. If the system does not change, hospitals have little incentive to improve: in fact, some will wind up losing money if they take better care of patients…

The study is based on a detailed analysis of the records of 34,256 people who had surgery in 2010 at one of 12 hospitals run by Texas Health Resources. Of those patients, 1,820 had one or more complications that could have been prevented, like blood clots, pneumonia or infected incisions. The median length of stay for those patients quadrupled to 14 days, and hospital revenue averaged $30,500 more than for patients without complications ($49,400 versus $18,900). Private insurers paid far more for complications than did Medicare or Medicaid, or patients who paid out of pocket.

The authors said in an interview that they were not suggesting that hospitals were trying to make money by deliberately causing complications or refusing to address the problem. “Absolutely not,” said David Sadoff, a managing director of the Boston Consulting Group. “We don’t believe that is happening at all.” But, he said, the current payment system makes it difficult for hospitals to perform better because improvements can wind up costing them money.

Susan Pisano, a spokeswoman for American Health Insurance Plans, a trade group for insurance companies, said in an interview that the study illustrated that the entire health care system needed to move away from what she called “the perverse incentives of the old fee-for-service system that emphasized quantity over quality, and toward methods of payment that reward better care.”

…Dr. Barry Rosenberg, an author and a managing director of Boston Consulting, said the study came about because his firm was working with Texas Health Resources to find ways to reduce its hospitals’ surgical complication rates, which, at 5.3 percent, were in line with those reported by similar hospitals. Part of that work involved analyzing the costs, and he said the team was stunned to realize that lowering the complication rates would actually cost the hospital money. “We said, ‘Whoa, we’re working our tails off trying to lower complications, and the prize we’re going to get is a reduction in profits,’ ” Dr. Rosenberg said in an interview…

In an editorial, Uwe E. Reinhardt, an expert on medical economics from Princeton University, called the study’s findings “troublesome but not surprising.” He called the current payment system “untoward,” adding that it “can tempt otherwise admirable people into dubious conduct.”

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6 Comments »

  1. http://obamacarefacts.com/obamacare-facts.php

    I’m not sure why you think ‘Obamacare sucks’ in a general sense, it would be far worse if a successful attempt in that direction were not made. But I’m just putting this link here because I looked at it last night and it cleared up some basics things that the likes of me can’t figure out on their own, and I saw mention of some preventive things that wouldn’t be there otherwise. That’s not exactly what you’re writing about, but preventive medicine does make this kind of hospital profit-making more difficult. I think one of them is mammograms, which an old friend didn’t get, and she died last Friday of breast cancer she’d had after 7 years. She lived in this building (above me, in fact), and I found out from her niece that she’d died in Bellevue Hospice that morning. I didn’t hear the commotion of her being taken out after being unable to get out of bed for 4 days. Another friend I reported this to uptown says ‘they kill people in hospices’, that’s probably somewhat relative thing. This was a wilful woman, to say the least, and had been both a good friend and a horrible neighbour (would not allow male workers in to fix plumbing that caused me extraordinary grief till I grew up and started calling the landlord), and she’d had a bad back, which most of us thought had kept her homebound fully 2 years until her death. But it became probable, if not quite clear, that she was suffering something much more serious, and she was determined to use the apartment as a hospice, although this could potentially cause enormous hazard from accidents. Which is not to say I blame her, and there is another neighbour who is much older, recently had several strokes and is blind. I almost did call the landlord about this until they got some ‘elder care’ to walk him up and downstairs, and made sure he wasn’t going to cause fires. I don’t know if Medicaid came into this, I contacted not the landlord, but a wise therapist on our block who treats policemen for stress, of all things. She gave me the names of the elder care things, and I gave them to the neighbour who has this almost unhealthy fondness for tending to dying people, and wants complete control over it, even though she’s not a professional. Most would have seen, for example, the woman upstairs after two days of not being able to get out of bed and called either 911 or the family,. and she didn’t because of the woman’s perverse secrecy. Not till 4 days had passed, and this ‘caregiver’ had made one call to the real nurse’s supervisor, did the visiting nurse come over and decide ‘no, this is untenable’, and she was taken, fighting, to Bellevue (now the closest emergency room, and none too close, since St. Vincent’s closed and became a condo).

    just as shocking as what you’ve written about in the post is the states that would get financial benefit if they expanded Medicaid, but won’t. This is hard to understand, and I don’t know where it stands as of now. But it seems so raw that it’s hard not to think they want to be sure Medicaid is not available so that certain people will not be taken care of even if it benefited the states themselves, etc. All this is hard to understand. But reading this and the linked websites, it’s still not easy to understand why Obamacare wouldn’t be a step in the right direction. Hillarycare didn’t succeed back in the day, and she didn’t win the 2008 nomination. Period. End of report. Obamacare barely got by, and the Moldbuggians (beautifully parodied, by the way, by Krugman the other day on their Bitcoin Fetish, did you see it?) think Obamacare is the most radically deadly thing that’s happened since the New Deal. There are also unexpected things that happen that have improved, although I don’t know why, or whether they have anything to do with Obamacare. Like Rite-Aid, for example, even gives big discounts on prescription medications if you have their ‘club card’ thing, and this can sometimes be as much as a hundred dollars difference. Just putting some ideas about this that I’ve found out, although I know you master the dollar amounts and various kinds of facts better, BUT….if all Obamacare did was enrich the insurance companies under cover of fake charity to the uninsured, would the Moldbuggians really think it was all that horrible. It might just be leading in the right direction, just like Obama does move away from Bush. Or doesn’t he? When I was still reading the Marxist bloggers, it was always easy to see that the incremental change was so unsatisfying to them in all ways, that they’d have rather continued with the torture of Bush, and of course, they did help re-elect him, along with Justice Rehnquist. I haven’t read the Moldbuggians for well over a month, so I guess they’re still calling Krugman a ‘thug’. I tell you one thing: Moldbuggianism is one thing that will turn you off to somebody really fast if you were too stupid (like me) to do it before. The Arpegians tend to just think their extremist ‘altermondialista’ views would surely be spoken by the likes of Chomsky, Krugman, and N. Klein, if only they weren’t in positions where it would be impossible to ‘hold down the job’. bullshit things like that.

    I started to post on your ‘Christmas Gift’ thread last night when the gun control check bill failed the Senate, which even you didn’t expect to happen (it appears most were surprised at this, haven’t read anything this morning.)

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    Comment by Patrick Mullins — 18 April 2013 @ 10:25 am

  2. Thanks for the link on Obamacare facts, Patrick. I look forward to going through it later, since I’m far from clear on all of the features. I’m in favor of incremental improvement, which includes preventive care. I’ll have to gain better understanding of the Medicaid expansion. It’s my understanding that in the short run Obama is using Medicare cutbacks to fund Medicaid, which isn’t a good solution. States differ, as you point out. In CO becoming eligible for Medicaid means only that you become eligible to put your name in the lottery for getting Medicaid coverage, since at present the money available isn’t nearly enough to cover all the eligibles. In most states Medicaid reimbursement rates are far lower than Medicare or private insurance; consequently many doctors, specialists in particular, refuse to treat patients on Medicaid because they can make more money treating other patients. Some primary care groups focus on treating Medicaid patients, using various cost-savings methods and paying lower salaries: these provider organizations should be the model for healthcare in this country.

    Regarding my overall response to Obamacare, the study excerpted in this post illustrates one of my gravest objections: the mandate that individuals buy private insurance without having a public option. “Private insurers paid far more for complications than did Medicare or Medicaid,” it says in the article. That’s because the Federal programs reimburse hospitals based on “episodes of care.” E.g., they pay a fixed price for bypass surgery, with some adjustments for risk/severity, like the patient having diabetes or prior heart attacks. So if mistakes are made during surgery that require expensive corrections, the hospital has to eat the expense. Private insurers pay for services rendered, even for fixing errors, as described in this study. Thus the Federal health insurance programs are more cost-effective than private insurance. Obama and Congress expand should expand access to these Federal programs rather than offering vouchers for the more expensive private insurers, especially since the taxpayers are putting up the money.

    Why don’t private insurers reimburse for episodes of care? In part because they too have financial incentives for higher cost care. As I recall, Obamacare mandates that private insurers can charge no more than X% of overall reimbursed medical costs to cover their administration and profits. That means the only way insurers’ profits can increase is if the costs of doctors, hospitals, meds, etc. also go up. Another reason is that, while insurers might be national in reach, care delivery is local. If one insurer wanted to introduce Medicare-based reimbursement in a local market, the local hospital could refuse to accept patients covered by that insurer. Medicare is the only game in town for seniors, so hospitals have to play ball with the Feds.

    More later, hopefully.

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    Comment by ktismatics — 18 April 2013 @ 12:51 pm

  3. Here’s an interesting provision: “Obamacare mandates that Medicaid payments be raised to the same level Medicare pays doctors. While it varies from state to state, primary care physicians will see an average 73% pay increase. This will make it easier for new Medicaid recipients to find doctors willing to take Medicaid.” That’s good for poor access to care, but why not find some middle ground between Medicare and Medicaid reimbursement rates rather than just raising Medicaid?

    This is a very good feature: “The cost of insurance premiums must be 8% or less of your modified adjusted gross income, when insurance goes on sale via the health insurance exchanges in 2014, to be considered affordable.”

    “ObamaCare doesn’t increase the deficit. It is projected to cut the deficit by over a trillion dollars over the next two decades.” The only way I see that happening is by increasing taxes even more than increases in the price of healthcare, which I see no real method of accomplishing in this program. As I’ve said before, mandating the purchase of private insurance that compensates providers on a fee-for-service basis establishes an inelastic demand, which is virtually guaranteed to increase the price of healthcare even faster than its already extremely high rate.

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    Comment by ktismatics — 18 April 2013 @ 5:35 pm

  4. Thanks for all that input. I just read the whole Times article. Shocking, of course, but that’s the beginning of doing something. I cannot see how this is something that was not already there, even if you maintain that Obamacare is somehow exacerbating it (I’m not sure you are, and didn’t find that in the article. It’s probably actually just finally being exposed, isn’t it?). It’s not impossible at all that these details and glitches won’t be tended to. It’s not going to be hard and fast going through 2017 and beyond, and problems will be looked at. They wouldn’t under the GOP, even if Bush did manage something or other half-humane with prescription drugs.
    Can’t remember that, but that was it. They don’t care about people, period. That’s what Krugman was saying about the Moldbuggians (being hilariously careful to never use the term, since he’s not going to give Mistah Moldbug any publicity, but they’re complaint about how, as ‘anti-sociables’, to quote one Moldbuggian, they are misunderstood, is not going to work quite as well as early sympathy for the paedophile-killer in Fritz Lang, Peter Lorre as ‘M’. He sure WAS ‘M’. There’s been a start, and I think it says in one of those links to the one I put here, in the ‘cost’ one, that those at higher incomes will be paying higher premiums. That didn’t sound like nothing to me, you can mull that over if you want to. As for ‘inelastic’, if it ‘almost certainly proves to be’, I can see it being worked at, if the political climate doesn’t deteriorate hideously again. But I’m surprised to be saying any of this, I am decidedly not an optimist, and yet I cannot see that Obamacare is not a step in the right direction. Healthcare is a HUGE matter, and a HUGE MESS, and it’s not realistic to expect it to be that perfect, since it barely survived (another goddam chief justice, at least this one didn’t try to kill us, and if he needed the ‘tax idea’, it’s better than going back to square one. So that even if you’re right about the technical difficulties and blockages, there was just NOTHING before to speak of.) Of course, I obviously agree, that if some doctor operates on the wrong organ, etc, that’s shocking, and I didn’t even know such shit actually happened. Never had heard of it. Thanks for posting that article, I’m sure TONS of people didn’t know about this till this was published the other day.

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    Comment by Patrick Mullins — 18 April 2013 @ 6:39 pm

  5. Uwe Reinhardt, the guy quoted at the end of the article, is a sharp scalpel. Here’s another recent piece of his in the Times. He shows graphs showing that the US providers charge 5 times what UK, France, Netherlands, etc. for common medical procedures. Reinhardt doesn’t push for single payer; instead he calls for more direct government intervention in the private-sector market to bring prices more in line with places like Switzerland and Germany, which work more like Obamacare but with much lower prices. “My explanation for the relative high prices Americans pay for health care relative to other countries is that the payment side of the health care market in the private sector is fragmented, weakening the bargaining power of individual insurers, especially vis-à-vis the increasingly consolidated hospital sector.” Only the Federal government can act as group purchasing agent for consumers under such market conditions, but Obama and Congress have not stepped in as governments do in other countries.

    The quotes preceding Reinhardt’s come from a managing director of Boston Consulting, a big high-priced, high-prestige firm. I worked a gig with BC once: they assign a lot of bright new MBAs to projects, but they don’t have much industry-specific experience. Whoa, I’m shocked, the guy says, which isn’t surprising. Uwe knows the biz, so when he says that the findings are troublesome but not surprising he’s speaking from his position as an industry insider.

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    Comment by ktismatics — 18 April 2013 @ 7:59 pm

    • Amazing. Fantastic stuff. So it is the opacity, you can’t even find out the price of various procedures on the web. But i still can’t believe that, now this has been opened up, that it can stop here. Hard to say, though. It was Wall Street that got bailed out, so this determination to a kind of bigness is not something that Europeans can’t live without. I do think things have definitely gone in a better direction, consolidated by Obama’s 2nd term, but he loves Wall Street and Maureen Dowd said in her op-ed the other day, that it makes him ‘feel tough’, the drone warfare that the CIA’s gotten so into. Two quotes: They were starting to realize that, while the American public approves of remotely killing terrorists, it is a drain on the democratic soul to zap people with no due process and little regard for the loss of innocents.

      President Obama, who continued nearly every covert program handed down by W., clearly feels tough when he talks about targeted killings, and considers drones an attractive option. As Mazzetti says, “fundamental questions about who can be killed, where they can be killed, and when they can be killed” still have not been answered or publicly discussed.

      I’m probably less worried about this than you are. I remember that innocents were the reason Bill CLINTON didn’t get OBL. Not that that is not the best possible reason for not killing him them, BUT…

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      Comment by Patrick Mullins — 18 April 2013 @ 9:09 pm


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