Next Steps On Healthcare In California

Robert Pearl’s provocative prescription.

California Speaker of the State Assembly Anthony Rendon established a Select Committee on Health Care Delivery Systems and Universal Coverage charged with determining (1) the method by which universal coverage in California could be financed and provided, discussed in an earlier post, and (2) how care should be delivered, which is the subject of this post.

The first subject gets more press coverage but the second is equally important, as powerfully illustrated by Robert Pearl’s new book, Mistreated: Why We Think We’re Getting Good Health Care — and Why We’re Usually Wrong.

Pearl — an M.D., the former CEO of The Permanente Medical Group, and on the faculty at Stanford’s medical and business schools — starts his narrative by pointing out an inconsistency: 76 percent of US patients describe the quality of care they personally receive as good or excellent yet among developed countries the US has the lowest life expectancy and the most preventable deaths per capita. Then he cites chilling examples of deaths by medical errors — including the fatal mistreatment of his father — that now account for almost 10 percent of all American deaths, making medical errors our third largest killer.

Pearl believes fee-for-service reimbursement discourages prevention and can lead to mistreatment.

The problem isn’t money: the US spends 50 percent more on medical care than any other country yet ranks 70th in overall health and wellness. Instead, Pearl believes his father died because his doctors were “disconnected” from each other. He attributes mistreatment to (i) non-integrated care (ie, right hands not knowing what left hands are doing), (ii) failure to use everyday technology (many of those who died from human error might have lived had their doctors simply “been equipped with electronic health records, mobile devices, and Siri”), and (iii) rewarding quantity instead of quality with “fee-for-service” reimbursements (“when you design a health-insurance reimbursement system that financially rewards doctors for providing patients with more as opposed to better care, that’s exactly what doctors value and do”).

Fee-for-service health care spending is analogous to paying several thousand dollars for a single bath towel that falls apart on the first wash.

Pearl writes that “most insurance companies reimburse care providers twice: once for the original problem and a second time for treating the complications they created,” which is “the equivalent of paying contractors double after they botch your kitchen renovation.” He acknowledges that physicians may not do it consciously but he insists “medical decisions are driven by dollars” (“a surgeon who earns double-digit returns from his investment in a surgicenter will see surgery as a more beneficial solution than a conservative, nonsurgical treatment”). Fee-for-service hospitals suffer from the same bad incentives: “Without the revenue from patient complications, many hospitals would teeter on bankruptcy” and “a recent study found that privately insured surgical patients with one or more complications provided hospitals with a 330 percent higher profit margin than those who had none.”

Kill a patient from a dirty colonoscope, and a host of regulators will be in your office the next day. Kill a patient by failing to schedule a colon-cancer screening, and no one gets blamed. One is malpractice. The other is mistreatment.

The consequences are not just to health but also to wealth as unproductive spending on health care has kept hourly wages for US workers relatively flat over the past two decades. There are also big impacts on education and other services that get crowded out by exploding government spending in favor of health providers.

Pearl’s solution is to “free American medicine from the outdated cottage industry it resembles today,” which requires:

• Integration, both horizontally within specialties and vertically across primary, specialty, and diagnostic care.

• Prepayment, which changes incentives by moving away from fee-for-service reimbursement towards paying for value and superior outcomes.

• Comprehensive electronic health record systems, patient access to medical information, and the ability to obtain care using mobile and video technologies.

Citing Mayo Clinic, Ochsner Health, Virginia Mason and Kaiser as examples of such systems, he supplies powerful statistics: “Patients in the highest-performing integrated care settings are, on average, 30 percent less likely to die of a heart attack or stroke, 40 percent less likely to die from sepsis, and 50 percent less likely to die from HIV or AIDS.”

When we pay physicians more to take care of heart attacks or strokes than to prevent them in the first place, they value emergency intervention dramatically more than disease prevention.

Not just health and wealth are affected by our flawed delivery system. As consumers we passively accept aggravating service from hospitals and medical offices that we would never tolerate from any other industry. “We sit in waiting rooms for long periods of time without demanding better service, even though we’d never tolerate such delays in a restaurant. We call up the doctor’s office during normal business hours and wait on hold, even though we’d never book a flight or hotel that way.” Likewise, manufacturers of electronic health records could make their systems compatible, which would make our lives both safer and easier. Banks, airlines, telecom providers and retailers long ago solved data compatibility problems. But the participants in those industries had to make life easier for consumers and more productive for themselves or go out of business. Health care in non-integrated, fee-for-service-reimbursement settings is different. According to Pearl, only half of all physicians have installed an electronic health-record system, and few use it to enable secure e-mail, video, or direct scheduling of office visits. If they can continue to make the same money whether or not they make our lives easier and safer, why should they change?

The objective must be better health, not just better coverage, and legislators must seek to protect wages, education and public services from rampaging and unproductive health care spending and profiteering.

No matter how the Select Committee chooses to achieve universal coverage in California, its members must also address (i) the incentives that lead doctors and hospitals to mistreat patients, generate unnecessary revenues and undervalue prevention, and (ii) what it will take to fully integrate care and employ technology. They should study prepayment models and integrated systems that make robust use of electronic health record systems and mobile and video technologies.