Repairing the Healthcare System

People Power Works! Maybe.

Stanley Feld M.D. FACP, MACE

Is the KKR and Texas Pacific Group leverage buyout good for North Texas? In order to make peace with public protest, the buyout team pledged not to ask for permits to build 11 Dirty Coal Burning Plants. They only want to build three (3). The permit to build the plant in Savoy, Texas will be withdrawn.

Late Saturday, February 24, 2007, KKR and Texas Pacific Group announced a $43 billion dollar leveraged buyout of TXU. The TXU board approved the buyout on Sunday.

How come so fast? According to the New York Times KKR, through Goldman Sachs, helped broker a peace with the environmental groups, and to get the environmental groups support for the transaction. If this is not a trick play on the part of TXU, KKR and Goldman Sachs, it represents a victory for the air quality in Texas. The new TXU is going to withdraw 7 of their 11 requests for permits for Dirty Coal Plants from the Texas Commission for Environmental Quality.

Grayson and Fannin counties just north of the Dallas Metroplex are the environmentally least polluted area of a very abused and polluted State of Texas.The building permit for the Valley Plant in Savoy, Texas has been promised not to be requested. This will not only keep Texomaland clean from coal pollution but save North Texas’ beautiful Lake Texoma from Mercury contamination. It will give Dallas and Ft. Worth a chance to achieve EPA attainment by 2010.

I have discussed the faulty Texas political system in the past. There seems to be an outright disregard for the health of Texans by our Governor Rick Perry and his probable unconstitutional support of the fast track permitting process.

Incidentally, I think Governor Rick Perry wants to run for Vice President in 2008 with the Republican candidate. I think the Republicans would be making a great mistake. He has, in my opinion, little common sense. He also says one thing and does another. He has ignored the will of the people on many occasions. The coal plant issue is only one of many faulty decisions that Governor Rick Perry has made.

There are many heroes in this effort to change TXU’s mind on the Dirty Coal Burning Plants. Listing the heroes would take pages. Only the uproar of the people (free speech), and the ability to educate the public saved the North Texas area from the health toxins Mercury, NOX, SO2, and Ozone and Particulate Matter. These toxins result in at least $34 billion of avoidable healthcare costs. Public protest was achieved through local meetings, internet connectivity, the blogosphere, and local and national media coverage.

It is my impression that the governor supported and fast tracked the process for less than noble reasons, The Texas legislature did not seem to want to get involved. Only through pressure by the uproar of the people did legislator timidly start signing on after only one state legislator made the protest proposal. Our national representatives did not say a word in defense of the people they represent and the people’s desire to have clean air in Texas.

I hope the lawyers that are working for CORE, SEED, and Environmental Defense are not blind sided by KKR. KKR is not the most benign leveraged buyout firm on the planet. I bet they bought TXU for a fraction of TXU’s real value just as they bought HCA for a fraction of its real value. In my opinion the reason KKR could buy TXU so cheaply is that public opinion made TXU public enemy number one. The public drove the price of the stock down making TXU a bargain at $43 billion dollars. I imagine the stock holders are relieved to get rid of their stock at the price KKR is paying.

I think we should not be thrilled that the State of Texas will only be getting 3 Dirty Coal Burning Plants. I think if there are going to be any Coal Plants, they should be Gasification Plants that reduce emissions drastically and are fitted with devices that also capture Carbon Dioxide. Carbon dioxide is the cause of global warming. It is a compound presently not required to be measured or regulated by EPA rules.

I have also noticed that in KKR and the new TXU’s discussions, the main immediate health dangers to the people of Texas are being ignored. The immediate danger is the health hazard of coal with Mercury emissions, Sulfur Dioxide, Nitrogen Oxides, Particulate Matter, and Ozone. The diseases resulting from Mercury are Autism, Attention Deficit Syndrome and Learning Disorder for Mercury at a societal cost of 100 billion dollars a year. Asthma, Chronic Obstructive Lung Disease (COPD), Heart disease for Nitrogen, Sulfur, and Ozone generate illness that cost the healthcare system $34 billion dollar a year aside from all human cost of morbidity and premature mortality. These costs are avoidable by not burning coal. Toxins not even mentioned or measured are uranium emission, dioxins and furans.

What am I nervous about? TXU will not longer be a public company. Therefore the public will not longer have any leverage over the stock price. There will be no chance for possible input by stockholders to the management. KKR and TXU can essentially do anything they want including raising electric prices or selling off our polluting electricity production on the national grid to others.

One friend called the leveraged buyout “eye wash.” It makes you feel better but does not cure the disease. It did not solve our problem of the disregard of our government for the public sentiment. Its’ lack of concern for the public’s health is astonishing to me. The present resolution of the immediate problem has simply made us feel better for the time being.

I am totally against government regulations and increased government bureaucracy. However, in order for the public to be protected, we might need electric power production to be regulated again in Texas, if TXU continues to abuse its’ power in the production of electricity.

We are all looking forward to the new TXU being the good neighbor they have claimed to be in the past. TXU investing in renewable energy for Texas would be a good start. We have plenty of wind and sun in Texas. They could also consider pricing it fairly if they want to earn the designation of a good neighbor.

My warning is watch out! This could be a trick play by TXU and KKR!

Is An Ideal Electronic Health Record Doable Today?

Stanley Feld M.D.,FACP,MACE

I thank my son Brad for writing about my post “Electronic Health Record Part 2”
in “Feld Thoughts.” I was pleased with the many comments that we both received. There are many smart people out there.

I think the difficulty in developing an EHR has been overstated. Most of the software pieces of the ideal electronic health record are currently available.

Few developers have asked the physicians what they need. Fewer developers understand why they encounter such massive physician resistance. Those who have tried to understand the resistance can not get a straight answer.

The reason is many physicians do not know what they need. They have little experience thinking about relational databases. They have difficulty understanding the potential to the increased efficiency of their daily workflow (effective relational databases) in the practice of clinical medicine. Most of the effective information technology in clinical practice has been in financial medical management. Financial outcomes have not been linked to medical practice outcomes in an understandable way.

EMR developers also have had difficulty getting the physician to sit down and listen to them. Physicians are very suspicious of data collection devices. Most of their experience has been with data collection that has been used against them by the facilitator stakeholders (the government, the insurance industry, and the hospitals) to penalize them or reduce fees.

I believe all the pieces of an ideal EHR are now. However, most of the pieces are stand alone silos and are not interconnected. The physician is offered an expensive and unaffordable product that seems to offer little added value to his practice except to eliminate paper. The value to the practice is not translated properly nor could they afford it if it was.

Brad Feld (my son) and my brother Charlie Feld have taught me a lot about information technology and relational databases. We have had many discussions about relational databases. I have studied its potential value to physician practices. In my opinion, few companies understand how the physician thinks and what his needs are. They do not know how to teach the physician to understand the value of an EHR to his practice.

I think the reason is that software developers are oriented toward the hospital as their customer and not the physician. Hospitals have money to spend on capital improvements. Physicians do not want to spend large amounts of money on anything, especially something that they perceive will add little value to their practice. In fact, the EMR might hurt their practice. They hear many horror stories from peers about worthless EMRs. Most effective EHRs are out of the price reach for the average physician or small physician groups. Physicians have heard and seen big organizations like Kaiser Foundation get fooled out of hundreds of millions of dollars. Many have had the same experience in their own hospital.

An Ideal Electronic Health Record can, I believe, be easily synthesized from the current technology in use by other businesses.

The EHR should be leased to the physician and the practice to make it affordable. The EHR should be sold at a penny a the click just as Mastercard’s system is sold to small businesses. The data can be stored on site or off site or both with stout privacy firewalls around each practice.

Many businesses rely on relational databases. Two simple examples are Amazon.com
and Netflix. Amazon tells me what books I would enjoy and Netflix tells me which movies I should order from my order history.

The airlines let me schedule a flight online. Southwest has my online ticket buying reduced to three clicks.

Wal-Mart buys store inventory based on sales. It automatically sets up delivery routes and schedules of thousands of products delivered to thousands of stores based on velocity of individual product sales.

Frito Lay builds potato chips and buys potato futures on the basis of historical experience and timely conditions such as social unrest or sporting events on television. If volume of sales drops in a city, Frito Lay automatically puts the potato chips on sale in that city.

E-trade, Schwab and others make trades online and adjudicate sales at the point of trade. I remember the days when stock prices were caulked up on a blackboard.

Almost every merchant uses Mastercard, Visa or American Express. They settle the price of purchases immediately. Mastercard even questions a charge that is too frequent. I was at a gas station and the pump was acting funny. I stopped pumping gas from that pump and reentered my credit card in another gas station. I was denied access. I also got an instant call from Mastercard asking me if I lost my card. The software picked up an unusual event in the use of the card.

Stores, restaurants and gasoline stations do not have a universal software system. They interface their different software systems with First Data’s system. First Data has been able to flatten out many interfaces so that there is universal processing at First Data’s end.

The banking industry has adopted online banking. I thought the personal banking would the last to adopt. The software company selling to the banking industry has made the interface easy for the personal banking customer. The pain of reconciling the bank statements is gone forever. Customer service encounters are down. Everyone seems happy. The banks net profits have increased and expenses have decreased because labor intensive tasks have decreased. The individual banking institutions do not own the software. They lease the software. They also pay by the click. The software people upgrade and maintain the software with all the appropriate backups and firewalls.

The same can be done with appropriate data based driven legacy medical information systems. However, many of the legacy medical clinics EMRs are not worth much. They are word processing systems and not data processing systems. Those systems will manage to get the paper out of charts and off the shelves. However, you can not learn anything from them to improve a clinical practice.

Most practice management systems have relational data base capability. You can figure out a percentage of Medicare population in the practice. You can also get the names of all the males over 55 years old with diabetes mellitus, impotence, and hypertension.
The EHR I am talking about is the next step. What have we, as physician, done to improve patient care? What has the medical outcome been? What is the price in medical services for the medical outcome? Are there any suggestions available using evidence based medicine for the physician to improve his outcome?

Remember, 80% of the cost of medical care is spent on the complications of chronic disease. How can we learn from the patients record how to reduce these complications without the threat of penalty to the physician.

What have I taught the patient? How much of what I taught him did he learn?
What is his adherence to prescribed medication?

How could a physician measure adherence to prescription with an EHR? The entire informational technology infrastructure is available. It can be automated. It is waiting for an entrepreneur to put it all together. When I give six months prescription, the patient only gets a thirty day supply from the pharmacy. This is a little scam the CVS’s of the world in conjunction with the insurance company exercise. Why? If your co-pay is $10 for a generic drug, CVS might charge a total price of $14. You paid $10 and your insurance company pays $4. For a six month supply your insurance company would pay $24 and you would pay $60. If they gave you the six month supply of medication I ordered you would pay a co-pay of $10 and the insurance company would pay $74. I would say that is a pretty neat drug benefit for the insurance company.

If I, as the prescribing physician, demanded that the CVSs of the world notify me by email each time the prescription is refilled, each notification could go directly into the patients EMR. On the patient’s next visit, I would know whether the patient refilled his medications appropriately. Patients have told me they refilled the medication when in fact the pharmacy had not seen the patient in the previous 4 months.

As an example such a patient would not be able to properly control his blood pressure. Uncontrolled blood pressure can lead to stroke or heart attack. Both are a complication of the underlying vascular disease that causes hypertension. Appropriate control of the blood pressure can reduce the possibility of stroke or heart attack by 50%.

Simply understanding and controlling compliance can save lives and reduce the cost of medical care. Can this process be automated with present day technology? Of course it can. It could help us be better physicians and give better service to our patients without it affecting our daily workflow.

I do not think it should take forever to have a universal web based EHR. It can be as rapid as CD’s replaced vinyl records. It takes an understanding of the physicians mentality, the physicians needs and the physician workflow. I will present many concrete examples of quality care improvement across all five parts of the EHR in the future.

Electronic Health Record Part 2

Stanley Feld M.D.,FACP,MACE

An effective Electronic Health Record must consist of five components

Electronic Medical Records
Personal health records (PHR)
Continuity of Care Record (CCR)
Electronic health record (EHR)
Financial Management Record

In order to have a fully functional Electronic Health Record, all of the components of the EHR have to be integrated and in a relational data base format. This is the only way we are going to be able to determine if certain approaches to disease management in a clinical practice setting have positive medical outcomes and positive financial outcomes (reduce the cost of care for chronic disease).

The interoperability of all components of the EHR is the key to a successful EHR
In the United States, the development of standards for EHR interoperability is at the forefront of the national health care agenda. I believe without interoperable EHRs, practicing physicians, pharmacies and hospitals cannot share patient information properly. Without an interoperable EHR we can not evaluate medical outcomes and financial outcomes effectively. Therefore, interoperability is essential if the EHR is going to help reduce the cost of care.

I explained how you can create your own instant Personal Health Record last month. I believe it is important that we, as patients, assume this responsibility now. We need to start getting our physicians used to our needs.

Every examination and every test done on you by your physician or a physician you are referred to belong to you. You or your insurance company paid for the test or the examination. You paid the physician to interpret the test. The test results should be in your possession. You could move to another city, change physicians, your physician could retire, or close his practice. If so, an important piece of your medical data could be lost forever. It should be your responsibility to maintain your data base.

Ideally, if your physician had an EMR he could electronically transfer your test result data and his interpretation to your PMR. He then has a copy and you have a copy. Both copies could be web based and well encrypted for privacy.

The Continuity of Care (CCR) part of the EHR should also be interconnected with both the EMR and PMR. The CCR should be the core data set of the patients disease record. In should contain a summary of the patient’s medical problems, treatment, medications, response to medications, and issues of care(compliance, adverse reaction to medications and treatment).

The CCR is the perfect place for the interactive section of the medical record. It can be used to teach the patients how become a “Professor of their Chronic Disease.”

If we think about Diabetes Mellitus as the chronic disease in point, the CCR should become a customized Diabetic Education Center. A newly diagnosed diabetic should have formal teaching about Diabetes in a Diabetes Education Center. After those initial encounters, depending on the patient’s learning skills, modules can be customized online by the physician to improve that patient’s skills in self-management. (See AACE guideline for Intensive Self Management of Diabetes Mellitus: A System of Intensive Diabetes Self Management. Obviously, this effort should not be uncompensated or undercompensated as it is presently. With an MSA the patient would be making the decision and not the insurance company who is interested in paying as little short term money as possible despite the long term benefit.

The continuing education piece of the CCR could feed back information interactively to both the physician and patient on the course of the chronic disease. It could continually monitor the patient’s response to treatment and changes in the self-management of the illness. The CCR could be customized with suggestions for the patient on how to improve self-management of the chronic disease to increase the quality of care and decrease the complication rate. Tim Wolters of Collective Intellect is trying to figure this out.

The immediate response of physicians is that such a system would cost too much. They also think integrated systems like this could never become universal in our chaotic healthcare system.

I think it could become universal with the proper visionary intervention and leadership. Rather than selling a complete software system to physicians, a clever software company would simply have the complete EHR in a web based format on the internet. Instead of charging the physician fifty (50) to eighty (80) thousand dollars per physician, the physician and the patient would pay to use the system by the click. The physician would not bear the burden of the initial capital expenditure and ongoing support costs of the EHR. He would have the ideal EHR with free upgrades.

Patients would not feel a burden of cost to access their record either because they would be billed by the click. The advantage would be an integrated communication system. The system would have the advantage of being data formatted, interconnected and relational with medical and financial outcomes.

PMR and EMR must be synchronized to other components of the EHR. A vital connection would be with the Financial Management Record. There is no reason in a price transparent, consumer driven healthcare system where the consumers own their healthcare dollar that the consumer can not make the instant decision about the charges. The insurance claim is generated at point of service and integrated with the service. The patient makes the decision to pay the bill by credit card, just as the consumer does in during a typical store purchase. The bill is adjudicated instantly by credit card and deducted from the patient’s Medical Saving Trust Account.

The physician’s office has saved the expense of filing a claim, waiting for the claim to get adjudicated and then receiving payment three months later. The new electronic system (EHR) eliminates the $150 billon dollars of administrative waste in the healthcare system.

Why hasn’t someone in the insurance industry thought of this? Maybe they make too much money from being inefficient and having administrative waste.
Paul Krugman (New York Times February 16,2007) says it beautifully in the article entitled “ The Health Care Racket”

I have pointed out previously why hospitals do not want to change the faulty DRG system. It could be Insurance companies do not want to eliminate administrative waste because they and their subsidiaries’ profit from this waste.

Physicians who bought ineffective EMR’s might not want to put them aside for an effective system However, a powerful incentive could be instant adjudication of payment of claims by the patient.
It is going to take leadership and innovation plus the demand from the people, to create a much need paradigm shift from the way the healthcare system does business presently.

StepsTo Solving The Hospital Services Pricing Problem

Stanley Feld M.D.,FACP,MACE

The $2.1 billion is at the low end of a 1000 bed hospital’s total revenue. Bed fees are even higher than the $12,000/day average for cardiac patients with complications. This is called DRG creep. The hospitals have also managed to get the patients out of the hospital under the DRG cap. If not, they seem to find a way to extend the DRG cap. The cap means that certain illnesses are paid a flat fee and given number of hospital days. Let us say a DRG for an illness payment is $24,000 ($6,000/day for 4 day hospital stay). If the patient is in the hospital for six days the hospital gets the same $24,000. If the patient is in for three days they get $24,000. You can see why the hospital’s motto is get them out fast.

We are unable to know the hospital’s actual overhead. If we did, we could to find out what the hospital’s actual costs are. We could then calculate the hospital’s profit. These numbers are totally opaque.

Most hospitals are non profit hospitals. They can not post a profit at the end of the year? Therefore, they have to pour the extra money into something. Executive salaries and capital expenditures are a prime avenue for getting rid of their profit. A key question is how is the hospital’s overhead calculated? Maybe reducing costs to the consumer would be a good idea?
If a hospital makes capital expenditures with the capital they have to spend each year they receive added cash incentives. If a hospital has a house staff or nursing school there is sizable bonus received from Medicare for the professional training programs.

I received this comment from a knowledgeable follower of my blog

“Stan

Too few ever wonder much about why the medical centers have grown so over the years. Once you do, you will want to look at the incentives for capital improvements granted to large referral centers, especially those with professional training programs. These incentives were mandated by Congress, just as were the DRGs. I believe the capital incentive programs leave the DRGs in the dust for the advantage for profit/income generation for those institutions.

Richard Dickey M.D. ,FACE”

If you would suddenly became ill and have to go to an emergency room, because you need help immediately, you can not shop for a hospital on the internet. You are stuck. Shouldn’t there be some rules that reflect the cost and value of the hospital service? If your life is saved, the fee charged is priceless if you had some way of paying for it.

The solution is not price controls or a single party payer. The solution is price transparency, and the creation of a price competitive environment among hospitals.

President Bush’s approval rating is at an all time low because of the Iraq war. However, his medical advisors understand the healthcare systems problems. He has called for price transparency. Congress, under the influence of vested interests, stopped him. He called for DRG reform on the basis of hospitals’ cost and not charges. Again congressional outcry influenced by vested interest stopped the process. I have a feeling Mark McClellan M.D., Director of CMS, quit because of the delay in DRG reform.

President Bush has been able to get through some insurance reform. The deductible limit on a Health Savings Accounts have been raised for an individual is now $5250 and 10,500 for a family. However, the HSAs are constructed in favor of the insurance industry and not the patient. They still do not have a community rating system in place. The insurance industry fought with 4 years of lobbying to stop a Medical Saving Account in favor of the patient.

This year President Bush proposed tax deduction of up to $15,000 per family to by insurance. Yesterday he told hospitals not to press their luck about prices and charges.

I know the President and his people know all the issues necessary for true reform and the repair of the healthcare system. They simply can not accomplish true reform piecemeal. The piecemeal approach to the entire needs for effective healthcare reform to occur is inot understandable to the goal of reform to the public, media or congress. Piecemeal reform will also get distorted by the vested interests (facilitator stakeholders) during the legislative delays.

Medicare has not hesitated to reduce physician fees. They will be reduced 5% again this year. Medicare is presently regulating the price it is paying the physicians. The government’s tactic seems to be to beat up the guy you can beat up the easiest.

Congressman Pete Stark has said all physicians game the system. They have to be stopped. Congressman Stark’s view is far from correct. However, if you instinctively know you have a product or service that is needed, and other stakeholders are taking undo advantage of a dysfunctional system, some feel they might as well try to get their share.

However, when Mark McCellan M.D. discovered that 90% of the healthcare dollar was spent on the complications of chronic disease. His goal was to improve chronic disease management to reduce complications.

The government declared in the Federal Register it was going to reduce the payment for Bone Mineral Density by 70% over the next four years. The medical profession made a feeble attempt to stop the reduction. A Bone Mineral Density can diagnose early osteoporosis. Early treatment can prevent future osteoporotic fractures.

When the government tried to change the DRG system to reflect the actual hospital cost of service as opposed to charges, Congressman came out the woodwork to delay and stop the process.

How come? The political system has nothing to do with common sense and logic. It is driven by the most effective vested interests.

Who should have the most important vested interests? We are supposed to have a government run by the people for the people and not the best lobbying group. People need to step up and speak out!! Eventually, the wisdom of the democratic process and the peoples’ interest will prevail. We do not have the time to wait. We must speak up now!

Healthcare Should Not Be All About Money! It Should Be About Delivering Cost Effective Medical Care!

Stanley Feld M.D.,FACP,MACE

Val Jones M.D. Senior Medical Director of Revolution Health in her Voice of Reason Blog post entitled “Hospital Adminstrators’ Salaries Draining The System” was more vitriolic than I was about Paul Levy’s defense of his one million dollar plus Hospital administrator CEO salary.

In her post she said
“Well, this conversation from the blogosphere gets my blood boiling, I can tell you! In a recent blog post about the ugly under belly of hospitals, I discussed how administrator salaries decrease hospital resources. Dr. Stanley Feld’s excellent blog post digs even deeper:”

In her post “Why Hospitals Are So Ugly” she said, “So one day I called the chair of the department of interior design at Parsons School of Design and asked whether she might send her students to my hospital to consider how to improve our situation.”
“I found out much later that our acting CEO was making about ½ million dollars per year in salary at the time. All the while the poor patients had to recover in a grim void of sensory stimulation.
Several months later the Parsons students made a presentation to our hospital’s executive team, and this was met with great enthusiasm. We all thought that we were on the verge of an exciting breakthrough for patient wellness. But alas, in the end not a single design suggestion was implemented as our administrators told us that there was no money available for environmental improvements.”
There is ugliness in hospitals – and it runs deeper than the white walls. As with many sectors, money is the deciding factor regarding whether or not something gets done. I think that hospitals should take a hard look at their white walls, and the white linings of their executive pockets and ask themselves whom they were built to serve.”

Many physicians have experienced false hope and false promises from hospital administrators. Val Jones M.D. hit the nail on the head. It is all about money! A big part of the healthcare system’s dysfunction “runs deeper than the white walls” in the hospitals. The healthcare system’s dysfunction originates in the board room of administrative meetings, the synergism of hospitals with the insurance industry(see Dr. David Westbrock’s comment at the bottom of the link)
and a faulty DRG system.

A faulty DRG system that hospital administrators have learned to exploit over the past 23 years.
The patients are simply pawns in the money game. Paul Levy gets an incentive bonus on revenue generated from this faulty system. There are many ways to optimize DRG payments from private insurance, Medicare and Mediciad. All you have to do is hire the right consultant to teach you how to do it.

The loser is the patient. The biggest losers is the patient without health insurance because he is responsible for the retail price and society as a whole.

DRG payments for Massachusetts are totally opaque. The only state I could find that publishes DRG charges was Wisconsin. It is fascinating to explore the hospital charges for various illnesses. I picked a hospital in Milwaukee and choose coronary angiography and cardiac bypass surgery as examples of charges. The report also presents payments from the insurance industry, Medicare and Medicaid. These charges are hospital charges and do not reflect hospital costs.

It is true sticker shock. It is an explicit examples of how hospitals charge and what they get paid. The hospitals collect 71% from private insurance, 39% from Medicare and 27% from Medicaid. I was told in a personal communication that a hospital can make a very nice profit with Medicaid payment for Obstetrical care service if efficient care us delivered. A bed generating $12,000 a day on average, is not a bad business.

The hospital charges for sub-specialty procedures are even more. Disease complications (risk weighting) increases charges further.

Let us assume at the low end the average payment is $6,000 a day per bed according to the Wisconsin DRG price information. The bed revenue in 365 days is $2,190,000 per year. A 1,000 bed hospital would generate revenue of $2,190,000,000 (2.19 billion dollars) a year. What is the hospital's real overhead? Just try to find out! Have you ever wondered how almost every hospital in the country can afford to expand? Does Paul Levy deserve a performance bonus? How much are other secondary administrators earning? What kind of incentive bonuses are they getting? How does that add value to the patient-physician relationship? We have a big problem!

I will discuss one piece of the solution next time.

.

Is He Worth Over One Million Dollars Per Year?

Stanley Feld M.D.,FACP,MACE

Paul Levy CEO of Beth Israel Hospital writes a blog called" Running a Hospital". He has tried to justify his salary after the Boston Globe published his salary of over 1 million dollars per year.

Mr. Levy’s statement is a worthwhile read. He is justifying his salary on the basis of revenue generated, and donations received. He is also comparing his job to the jobs of CEOs of large corporations that make more than he does. His justification a well articulated as are most of the comments both positive and negative.

It is bizarre to me to read this kind of thinking at a time when most agree the healthcare system is broken.

Some feel it is about to implode. Paul Levy has figured out how to have his institution survive in a broken healthcare system. I cannot understand how he would have the guts to brag about how much he is worth rather than do something to help fix the broken system. He could hire more nurses. He could provide preventative management care to the community to decrease the incidence of the complications of chronic disease.

Remember, the complications of chronic disease cost the healthcare system 80% of the healthcare dollars spent. Effective disease management using evidence based medicine can decrease the complication rate by at least 50%. The net savings to the healthcare system would be 40% or more.

What about the patients who can not afford insurance? What about the opacity of hospital prices charged for services? Remember Denise’s letter to Kinky Friedman and her problem with hospital pricing? What about the overcharging of hospitals through a faulty DRG system? What about the constant shortage of nurses because of low salaries?

What about the continuing decreases in payments to physicians by Medicare and the insurance industry?

Linda Halderman M.D. wrote an essay entitled "How Much is Your Doctor Worth?". It is also worth reading. The subtitle should be, “How Much is Your Doctor paid?” The answer after the long essay is $59.50 for this complicated office visit. Dr. Halderman would only have to see 168,067 patients in one year or 744 patients a day to generate a gross revenue of $1,000,000 before expenses.

What is more valuable to the healthcare system? A CEO’s salary based on revenue generated incentives and fund raising or good quality medical care?

Family Practitioners and Internists are struggling to survive.

Some have experienced that their overhead is greater than their revenue. Some have had to hold two jobs. The American College of Physicians published a White Paper declaring that the specialty of Internal Medicine is in grave danger. Patients cannot afford their medication. If they do not take their medication they will accumulate more and more complications of chronic diseases. Complications of chronic disease are good for the hospitals’ bottom line. This should result in more revenue for Paul Levy’s hospital. By his reasoning he will be entitled to a greater performance bonus at the end of the year.

Dr. Donald Seldin, the legendary Chief of Internal Medicine at University of Texas, Southwestern Medical School imbedded in our brains, when we were residents of Internal Medicine, that the practice of medicine is a princely profession. We, as physicians, have the privilege of caring for the sick. Hospital administrators, as facilitator stakeholders, should feel the same obligation. They have an obligation to the community to make medical care available and affordable. The mission should not be to enhance the hospitals’ bottom line in order to increase the performance bonus of the CEO.

Remember hospitals such as Beth Israel Hospital in Boston are tax exempt community hospitals because they have this community obligation. These tax subsides and others tax subsides are opaque to the public. However, the public pays for these subsides. They contribute to the hospitals bottom line and Mr. Levy’s bonus.

Kevin,MD Medical webblog (A wonderful medical blog) picked up Paul Levy’s blog. Mary Lu, a fellow hospital administrator, commented in Kevin's blog a sentiment expressed many people.

“Kevin, this guy gets the brass ones award for being so forthcoming-- It will be interesting to follow how this affects his perception of himself. As a fellow administrator, who is paid a hell of a lot less, I can only wonder what in the hell possessed him to write this. But... it's going to be interesting!
# posted by Mary Lu : 6:11 AM”

I think you can start seeing what medical care system, the healthcare system, and the American public is up against. Single party payer will simply result in more abuse to healthcare delivery. l

The solution would be easy if we can force the political system to respond with common sense. The logical response does not happen often in our political system.

Patients have to take charge of the system now!! The patients must control their healthcare dollar with the Ideal Medical Saving Account System. I believe this is the only way we can set up a price competitive system.

The politicians will not do it on their own. The political system can do it with pressure from you, the people, on your State Governments.

We have a lot of work to do. First, we must understand the issues.

What Healthcare System Could Work? A Universal Healthcare System Will Not Work!

Stanley Feld M.D., FACP, MACE

The solution should be pretty clear to all following my blog. I advocate the American way! I believe a consumer market driven system with government making rules for the benefit of all members of the society. When one stakeholder takes advantage of another stakeholder to the harm of the other stakeholder the government has to intercede.

Richard Swersey Columbia College Class of 1959 has a college degree in the ability to think! He also has a post graduate mining degree and masters of business administration. He wrote “You referenced Adam Smith in your blog on dirty coal plants. People need to be reminded that: (1) there is a large section of “Wealth of Nations” entitled “The Role of the Sovereign”. Even Adam Smith recognized that the market can’t do everything; and (2) there has never been a time in recorded history where commerce (or markets, or industry) was totally free of government intervention.”

I made the same point in the blog on the TXU proposed dirty coal plants. Adam Smith’s treatise also applies to the healthcare system. The function of government is to promote civility (civil right) for the benefit of all and not to build bureaucracies that can not possibly work effectively.

Dick is absolutely correct. The function of government in a democracy should be to function for the people by the people. The operative words are for the people and not to the disadvantage of the people.

Entrepreneurship and obtaining a competitive advantage is the engine that drives innovation in America. Our problem in medicine right now is some the facilitator stakeholders have large vested interests they need to protect. They are very busy protecting their vested interest by various political means. Unfortunately government is not acting for the benefit of the people. The advantaged stakeholders are so short sighted that they can not see that the system they are protecting is falling apart right in front of their eyes. In fact, it is about to blow up. We, the primary stakeholders (patients and physicians) can not see what does not hurt us. We are waiting for the Katrina effect. The mentality of what we can not see can not hurt us has to stop. We have to act know and demand change.

In my view price transparency and the consumer (patient) being in control of their own healthcare dollar can go a long way to transform medical services into a competitive market place.
Some of the insurance companies are talking a good game. Aetna has feigned price transparency in Cincinnati. They published only the price of the top thirty procedures for customers that bought HSAs. This is good start but never expanded to my knowledge. I called this blog Another Smoke Screen.

Wal-Mart made an innovative advance with its generic drug initiative. They are charging $4 for a thirty day supply of generic drugs. They have 340 drugs in the formulary. Physicians feel comfortable using some generic drugs. They also want to help their patients. Patients can also demand generic drugs. Most physicians will use generic drugs if there is not a clear cut difference between the generic and brand name medication.

Wal-Mart can not keep the drugs in stock. They also can not keep people out of the store. Wal-Mart is not losing money on the drugs either. The result will be an increase in net profit to Wal-Mart and a consumer driven market benefit for the patient. It will also force brand name drugs to come down in price. Wal-Mat's initiative will created a clear market driven economy for buying drugs.

Who needs Medicare Part D and its $10 co pay along with its ominous $2200 doughnut? Wal-Mart is also setting up competitive price wars among CVS, Walgreens Rite Aid. Wal-Mart has good chance of winning because it has the mentality to engage in these kinds of innovative programs. The CVSs will get there as it works its way through their hierarchical bureaucracy. The end result will probably be too little too late for CVS.

The most of the uninsured who could buy insurance have had no choice but to not buy insurance.
They have chosen take their chances. When they get sick someone has to pay or not get paid. This is the point. It gets painful and costly for all the stakeholders. The Canadian model of Universal Health Care with a single party payer does not work. The costs rise, access to care is restricted and patients die.

The main question is how do we fix the problems. We have to exercise some common sense. We need to be equitable. The vested interest empires (facilitator stakeholders) have to start to understand that our most precious possession is our health and not their profit. A healthy nation is a strong the nation. They have to stop fight the Repair of the Healthcare System.

Price transparency, reform DRG on cost and not charges are very important. We must stop the bonus to hospitals or insurance companies for supposed cost overruns at the end of the year. We must provide incentive for disease management training to all patients with chronic disease. We must make the patient responsible for their healthcare and healthcare dollar in a price transparent environment. We must motivate the patient to care for their chronic disease by rewarding prevention of complications of disease.

We must eliminate hospital and insurance company administrative waste. We must neutralize defensive medical practice by malpractice reform. We must revolutionize the adjudication of claims system to a system of instant payment.

We must provide and institute an EHR universally that can measure outcomes. The outcomes we must measure are the medical outcomes. The medical outcomes must be relational to the financial outcomes and patient and physician input as to the value of the outcome.

We need to start getting serious about all of these issues in unison. We have to concentrate on the cost of complications of chronic disease. We must create financial incentives for preventative services. We have to teach the patient the “Professor of their Chronic Disease”.
http://stanleyfeldmdmace.typepad.com/repairing_the_healthcare_/2006/06/do_complication.html

We must motivate the patients to be responsible for their chronic care. If they are not they will have a financial loss as well as a medical loss. We must put the patients in control of their healthcare dollar. I believe if we did all of this our healthcare system would not be in trouble. All of this can be accomplished with the Ideal Medical Savings Account. The structure of the current HSA system will not accomplish all of these key initiatives

If the government wanted to subsidize something it would be the purchase of the ideal medical savings accounts for all the uninsured who could not afford to buy insurance. This would eliminate all the waste in Medicaid. The concept of universal healthcare with the government as a single party payer is a sham because it does not address any of these important initiatives.