Maybe Congress Should Hand the Job Over to Someone Else?

By Maggie Mahar

Today, I posted something on TPM Cafe that readers may find of interest.

I reprised some of what I said about events in the Senate last week, but then went on to consider what this means for Medicare reform. Perhaps reform requires a degree of “bi-partisan statesmanship” that a highly polarized Congress doesn’t have.

 What that in mind, HHS Secretary Mike Leavitt has made a startling proposal. I think it’s worth talking about it. If you’d like to comment, post on TPM, or come back here.

Comments

[pcb]

maggie,

I've noticed in discussions regarding govt delivered care in other contexts that waits, poor access, delayed testing and care are usually defended by the "of course there are excessive waits and delays, the system isn't being funded adequately."

I'm starting to think that's the rule for such systems and cannot be explained away.

It has been argued before that when the care is free or "covered" for a population, the main (only?) way to control costs is to limit access to care. which is exactly what happens in the VA.

[Barry Carol]

Maggie,

I don’t think the Heritage Foundation’s bias is relevant in this particular case, at least as it relates to the description of how the VA does business with drug companies.

According to Heritage, drug prices are set by statute. That is, the VA gets the lowest price given to any other federal buyer (except for Medicare and the FEHBP) under similar terms and conditions plus an additional discount of at least 24%. This is quite different from a team of VA negotiators sitting across the table from counterparts at each drug company to arrive at drug prices. The fact that the VA’s formulary is much more restrictive than the typical Part D plan is also clearly the case.

If Congress were to pass legislation that would apply the VA drug pricing approach to Medicare as well, it is less than clear how it would play out. I can easily see how drug companies are willing to accept the VA’s terms for a population that is not only comparatively small but is also a highly sympathetic group. If the VA’s prices also applied to the Medicare (and possibly the Medicaid) population, neither one of us can predict with any certainty how that would play out. The VA may well benefit from the fact that it is only accounts for a very small part of the drug market. As you know, economists call this the fallacy of composition, also sometimes called the importance of being unimportant. To scale up the approach to a much larger population could easily have significant unintended consequences including an adverse effect on the scope and pace of future innovation. Neither you nor I can forecast how applying the VA approach to the Medicare population will play out, regardless of whatever bias we may have.

As for seniors themselves, they are likely to be unpleasantly surprised if they suddenly find the formulary of drugs available to them is one-third the size that it was before. Older veterans, who can access Medicare for drugs not on the VA formulary, would probably not be pleased either. I don’t think seniors currently perceive that one of the likely consequences of Medicare either negotiating or legislating lower drug prices could be far less choice than they currently have. Maybe the list of available drugs could be cut by two-thirds without adversely affecting health. I don’t know one way or the other, but seniors are not likely to be pleased if it happens.

[Maggie Mahar]

Everyone-- I realize that several of you have had bad individual experiences with individual (or 4) VA Hositals. But that really doesn't give you an overview of what's going on.

Below, a few individual responses, but first a note

I have visited VA hospitals, where I interviewed very intelligent doctors who liked their work. (I found these docs myself; they were not recommended by the VA. And yes, they had also worked in other places.)

I also have interviewed very satisfied VA patients and relatives of VA patients.

But, FRIENDLY ANONYMOUS, I don't rely on my own personal opinion--just as I wouldn't rely on Happy Hospitalist's personal opinion or yours or your wife's.

Generally speaking, I turn to expert physicians-- doctors who have researched a subject intensively (and who have no axe to grind) for expert opinion.

Here is Dr. Donald Berwick, (regularly voted on of the 10 most important men in American Medicine) and founder of the Institute for Health Care Improvement on the VA:

"The Veterans ADministration is setting the pace in the nation for demonstrating a real, systemic focus on quality. It's especailly impressive because this is a massive system that works in a fishbowl, is under tremendous scrutiny and has constrained resrouces."

Berwick bases this in IHI's extensive reserach as well as medical reserach I cite below.

FRIENDLY ANONYMOUS-- Let me suggest that you read some of IHI's work on over-testing (and the risks for the patient) and docs who don't follow guidelines (Note, we're not talking about rules, but guidelines. And Yes, Mayo does follow guidelines, though docs can stray from guidelines in individual cases---usually after consulting with other docs. No Lone Rangers at Mayo.)

Let me add, as I have said repeatedly, since 2000, the Bush administration has failed to give the VA the funding it needs to keep up with the rise in the number of patients going to the VA (in part because of the war, in part because as its reputation rose in the 1990s, more patients started going to the VA).

As a result, there are now long waits for appointments. Google the problem and you will find a lot of Congresional testimony and concern on the part of Republicans
as well as Democrats

BY 2005 THE NUMBER OF PATIENTS THE VA WAS TREATING HAD DOUBLED IN TEN YEARS TO ROUGHLY 7 MILLION. MEANWHILE THE VA, which has been squeezed by niggardly funding HAD MANAGED TO CUT ITS COSTS IN HALF--

Nevertheles, peer-reviewed medical journals have continued to publish stories about the VA's success: "Creating a Culture of Qaulity: The Remarkable Transforomation of the Department of Veterans Affairs health Care (Annals of Internal Medicine, 1004) "Effect of teh Transformation of the Veterans Health Care System on the Quality of Care" (NEJM, 2003) "VA Hospitals Found Best in Overall Quality, But Not Everyone Measures Up" (Health Care Strategic Management, 2005) "Diabetest Care Quality in the Veterans Affairs Health Care System and Commerical Managed Care" (Annals of INternal Medicine, 2004).
VA Diabetes care was better.)

IN TERMS OF QUALITY: A 2005 RAND CORPORATION STUDY BROADCAT THE RESULTS: COMPARING MEDIXCAL RECORDS OF 600 VA PATIENTS WITH THOSE OF ABOUT 1,000 NON-VA PATIENTS WITH SIMILIAR HEALTH PROBLEM< RESEARHCERS FOUND THAT CHRONICALLY ILL PATIETNS WHO CAME TO THE VA RECEIVED 72 PERCENT OF RECOMMENDED CARE WHILE PATIENTS IN THE CONTROL GROUP RECEIVED ONLY 59 PERCENT OF RECOMMENDED TREATMENT.

WHEN IT COMES TO PALLIATIVE CARE THE VA STANDS OUT: "Nowhere is the growth in hospice and palliatve care as rapid as at the VHA (Today's Hospitalist, 2004).

ON PATIENT SATISFACTION,

CHRIS--a good question. IN 2006: "Veterans continued to rate the care they receive through the Department of Veterans Affairs health care system higher than other Americans rate private-sector health care for the sixth consecutive year, a new annual report on customer satisfaction reveals.

For VA Secretary R. James Nicholson, the news is affirmation of what he called "the greatest story never told," that the VA offers top-quality care for its patients.

VA medical services received high marks during the annual American Customer Satisfaction Index, which has ranked customer satisfaction with various federal programs and private-sector industries and major companies since 1994.

Veterans who recently used VA services and were interviewed for the 2005 ACSI survey gave the VA's inpatient care a rating of 83 on a 100-point scale -- compared to a 73 rating for the private-sector health care industry. Veterans gave the VA a rating of 80 for outpatient care, five percentage points higher than the 75 rating for private-sector outpatient care and 9 percent higher than the average satisfaction rating for all federal services.

Happy Hospitalist-- On this blog we try to avoid words like "laughable" when talking about someone else's argument. You score the "culture of mutual respect" of a government hospital, but that is exactly the kind of culture we try to foster here--even when we diagree.

Finally, you have said repeatedly that you are adamantly opposed to "government medicine"--so quite naturally, that would give you a bias against the VA.

I think government medicine can work--but that doesn't make me think Walter Reed (run by the army not the VA) is a good hospital. NOr does it make me think that Mayo or the Cleveland Clinic are bad hospitals. It's a matter of looking at outcomes data, patient satisfaction, etc.

Barry--

As you know, the Heritage Foundation is a coservative think tank with a strong commitment to privatizing all social services. It cannot bear to admit that the VA does a good job; and, since it is in bed with drugmakers, it believes that the most expensive drug should always be in every formulary, even if it is ineffective or unproven.

The Heritage Foundation also regularly publishes facts that simply are not true. See The Conservatives Have No Clothes, a book by Greg Anrig.

There are liberal organizations that also distort numbers. For example, PNHP distorts just how much private health insurance costs our health system.

I have met and like many people in PNHP --and agree with many of their goals--but I would never use them as a source becauase they are so biased. I'm surprised you would cite Heritage.

PCB-- YOu are right about the waits-- since 2000 this has been a problem.
But my brother-in-law still goes to the VA for care (and he lives in Manhattan where there are many other choices. He also is on Medicare, and is comfortable enough financially to seek out private care.

But he likes the VA--particuarly since a primary care VA doc solved his hearing problem. He had going to a couple of hearing specialists in private practice--no luck.

But this doctor took the time. This seems to be part of what Friendly Anonymous minds about the VA culture:

"it is possible the va selects for people who like to be more thoughtful and spend more time per patient, but as noted above the culture of non-urgency that permeates the va system tends to overwhelm most everyone."

I think it's no doubt true that the VA culture is not a good fit for every good doctor. But overall, it's an impressive health care system. And it's the only place in American medicine which has fully integrated electronic medical records into care.

[Barry Carol]

This has been a fascinating discussion regarding the quality of VA care. Apparently there are quite a few ways to think about or define the quality of a healthcare system. They include: (1) Outcomes including everything from life expectancy to surgical procedures. There are, of course, many factors that affect life expectancy that have nothing to do with the quality of the healthcare system. (2) Process. I define this mainly as patients getting their routine screenings at appropriate intervals based on age and health status. (3) Patient satisfaction. Patients usually define this in terms of the three “A’s” – affability, availability, and last and LEAST, ability. (4) Culture. This is a provider concept that relates to how hard people work, how good they are, how they are rewarded, collegiality, etc.

Personally, I would define the quality of a doctor in terms of his or her clinical ability and communication skills first. Affability is nice but not required. The lead time to get an appointment should be reasonable as should the wait time in the waiting room prior to the appointment. If the doctor is backed up due to unforeseen circumstances, it shouldn’t be hard for the receptionist to let people know approximately how long the wait is likely to be.

From a healthcare system perspective, the most important aspect of quality to me is how good it is when I have a serious problem. If I need a CABG (which I’ve had), I hope the surgeon is very capable and has performed many such procedures both recently and over the course of his career. I hope the hospital nursing staff is competent and responsive. I hope the hospital has good procedures in place to minimize the probability of contracting an infection during my stay. Also, I hope the wait time to see specialists, get imaging tests and whatever else is required to diagnose my problem in the first place was reasonable. The same thought process would apply to patients with cancer or those who need an organ transplant, brain surgery, suffered a stroke, etc.

The European and Canadian systems have the reputation for being pretty good at primary care. If I have a serious issue and assuming I have decent insurance coverage, I would rather be treated here. If I’m uninsured, I would probably be better off (at least from a financial obligation standpoint) to be in another developed country.

[pcb]

Just another perspective on first hand experience with the VA:

many patients of mine go there "for their physical" or "for their meds." they won't go for anything scheduled less than 3 months ahead of time because "you can't get in." Emergencies? Are you kidding? they go to the local hospital instead. I don't know if the VA even has a traditional emergency room or not.

It's more of a "get your physical and meds yearly" place. Not sure how that model exists without the external support.

[Happy Hospitalist]

When a VA physician refuses to sign home health care agency orders for THEIR patient after THEIR patient is dishcarged from a private hospital after being seen by a private hospitalist because their VA refused to renew a financial contract with such hospital, it's impossible to have that show up on a study. When a VA doctor REFUSES to SIGN orders for THEIR patient until THEY see THEIR patient in THEIR office in several weeks (which is unacceptable), and tells the private practice doctor to tell the patient to travel 100 miles out of their way to the neartest VA emergency room to get THEIR patient's blood work drawn because THEY wont sign the order for the home health care agency, that is a culture of care that can't be articulated in a nicely packaged study for academia.

When an entire VA department of out patient internal medicine signs off call at 5pm on Friday and diverts ALL their calls to a VA emergency room run 60 miles away being staffed by moonlighting residents and fellows (who could care less), when private practice doctor at private practice hospital can't get ahold of ANY doctor in the department to discuss care plans, need for follow up labs and further evalation because VA docs only work week days, that is a culture of care that can't be quantified on an academic study.

Sometimes, choosing not to measure what is painfully broken is the easiest way not to fix it. I would never ever ever ever ever subject myself or my patients to the culture of care that permeates within the government RUN health care. It is a culture that I have been embarrassed time and time again for both my fellow physicians, all the way down to the cleaning staff. When a radiology technologist tells you to take a hike, that they won't drive in 15 miles to snap a chest xray on your patient dying in the ICU on a ventilaor, because they don't feel like getting out of bed, and have no expectation of consequences, that is the culture of care that obstructs care. The pass the buck mentality runs rampant in VA care. That was my experience. That is not a local experience. And it is not something that you can quantify in a quality outcomes study.

TO put the VA out as the pillar of quality is so laughable it's entertaining to watch you argue, because I know of all the intangible, just as important aspects of patient care that get lost oh so often in the culture of mutual disprespect known as Government Hospital

[Chris Johnson]

I've never worked at a VA hospital. However, it does seem to me that any discussion of the VA system should center around outcomes. Also, are there any data about patient satisfaction?

[jenga]

I agree with anon and happy. My experiences and discussions have led me to believe that working at the VA is akin to working for the city. Ten guys standing around watching one guy dig a ditch. A culture of laziness that you will never find a study on.

[maggiemahar]

Anonyous--

thanks for your input.

But I always wonder why people post anonymously.

This rarely happens on this blog.

You have anecdotal evidence-but little medical evidence.

I think both can be important (see my post on anecotes and stats) but the lack of any refereces to medical juournal articles referring to evidence- based medicine at VA hospitals bothers me.

For evidenced-baed reporting on the VAsystem, try reading "The Best CAre Anywhere," an excellent, recent book by Philip Longman about the VA.

a

a

a

a

.

The footnoes are filled wiht citations to medical reserach published in JAMA, NEJM on the high quality of care at the VA hospitals.

[anonymous]

maggie-
disclosure-in training, i worked at 4 different va's in 4 different states as a trainee. my wife worked at 2 different va's in 2 different states as a trainee. i was an attending physician at one va for one year. my wife was an attending physician at a va for 3 years.

honestly, i can't think of a single physician that we encountered over the years (and neither can my wife, i asked her) who thinks the va provides as good care as private practice on average, despite what the numbers you cite show. our definition of care is much more subjective, however, than whether the cholesterol number is forced into a category. certainly it is colored by how hard it is to obtain an mri immediately. now it is possible the va selects for people who like to be more thoughtful and spend more time per patient, but as noted above the culture of non-urgency that permeates the va system tends to overwhelm most everyone.

you draw comfort from the data sources you cite and your interviews with physicians. i don't know who these physicians are, but overwhelmingly physicians who actually experience the va are telling you that the measurements are not painting an accurate picture. you might argue about conflict of interest etc, and that might be true, but as you do when no data is available, i draw on my experience and that of those around me. if your sources are va employed physicians, i would ask them their comparison points with private practice--how expert are they in making a comparison?

perhaps you are as expert as can be for someone who does not practice the art of healthcare. i can't make you experience the professional frustration (i am speaking on the physicians side, although i am sure it is present on both sides)of not being able to diagnose someone who is pleading for an answer. you may consider it a waste to order a test that is rarely positive, but if we cannot predict in whom the test will be positive, should we not consider it? am i treating myself or the patient? who knows, but legislating what can and can't be done according to guidelines does not seem to foster patient-physician trust to me. it's good as long as you don't have an unusual disease or unusual expression of a common disease.

almost lastly, the information you present regarding the mayo clinic is of interest to me. because in my anecdotal experience as a referral source to the mayo clinic- they don't follow guidelines at all (which imo is fair because they are a super-tertiary referral source for tough cases), and as well, they frequently have the bestest and newest technologies and use them. not a model for cost savings, at least from the specialist side.

at least to me, the tone of your posts reads as one who is refusing to accept honestly provided expert observations, when they do not support your preconceived notions (maybe we all do this?).

imo, the happy hospitalist's va experience is not unusual at all. be careful what you wish for.

regards
friendly anonymous

[Barry Carol]

For an interesting take on the complexities and difficulties of applying the VA drug pricing model and its highly restrictive formulary to Medicare, see: http://www.heritage.org/Research/HealthCare/wm1420.cfm

[maggiemahar]

Happy Hospitalist--

I am glad you're still happy. (seriously)

And I certainly believe that doctors have a right to stand up to Medicare and protest on the issue of cutting fees.

Where we disagree is to whether grannyies should become the victims.

You say that grannies have more political power than docs. Certainly the ARRP has power. But grannies who have average household income of $20,000 just don't have much clout.

I'd like to see seniors and doctors get together on these issues.

[Gregory D. Pawelski]

Barry points out that some drugs may work well for 60% or 70% of the patient population that needs them but a different drug in the same category might work better for others. I cannot speak for other medicines, but in cancer medicine, it is more like 30% to 50% of cytotoxic drugs, and 10% to 15% of targeted drugs that work for the patient population that needs them.

In regards to a different drug in the same category working better for others, with the efficacy rates being so much lower with targeted therapies, there has been a headlong rush to develop tests to identify molecular predisposing mechanisms whose presence still does not guarantee that a drug will be effective for an individual. Nor can they, for any patient or even large groups of patients, discriminate the potential for clinical activity among different agents of the same class.

Gene profiling tests, important in order to identify new therapeutic targets and thereby to develop useful drugs, are still years away from working successfully in predicting treatment response for "individual" patients. They will never be as effective as the functional profiling tests, which exists today and is not hampered by the problems associated with gene expression tests.

It amazes me that CMS doesn't emphatically mandate oncologic in vitro chemoresponse assays as a requirement for obtaining chemotherapy reimbursement against ill-directed treatments. Profit, as we have seen, is a powerful motivating force. Among the private payors, at least, the profit motive is entirely consistent with the goal of these cell-based tests, which is to identify efficacious therapies irrespective of drug mark-up rates.

[maggiemahar]

Barry--

Still intersted in who hosted the conference, but I also wanted to respond to a couple of specific points:

On angina: yes, I know it is uncomfortable and creates anxiety. My mother had it.

But we also know that a change of diet and exercise can do as much good--or more good--than angioplasty.

Doctors I have talked to say many patients just want a quick fix-- do the angioplasty, get rid of the pain.

They don't want to do the work of changing diet and lifestyle, even though, in the long term, they would be much better off.

Do I want to pay for someone else's quick fix?
I guess I'd like him to try the change of diet and exercise for 6 or 9 months first. But I realize that "changing diet and exercising" is a lot, lot harder than it sounds. And I don't blame people if they try and can't do it.

And I certainly don't want them to walk around in pain while suffering great anxiety . . .

On the notion that formularies in other coutnries are "one size fits all" ie. --that they either include the drug for everyone, or exclude it for everyone-- this simply isn't true.

(And this is the sort of thing that makes me wonder who sponsored the conference.

All of these formularies include and exclude drugs for patients who meet a certain profile. A drug that might not benefit someone over 65 who has never had a heart attack might be of great benefit to a 50-year-old who has had a heart attack. And so NICE and other govt agencies approve coverage for the patients who medical evidence shows will benefit.

As for CMS not having the "experts" needed to negotiate discounts--another red herring.

The VA has been very, very successful in negotiating discoutns. Maybe CMS could let the VA negotiators train their negotiators? Why would the VA be better at this than CMS?'

The notion that "govt' lacks the expertise to negoatie" is simply not true.

AS for Pharmacy Benefit Managers-- this is an extremely corrupt industry.
Search the WAll Street Journal and The New York Ties for stories. (Reed Ableson did a couple of very good ones, if memory serves.)

[maggiemahar]

Barry--
I'm curious--who hosted the conference?

[Barry Carol]

Maggie,

The issue of the government negotiating drug and device prices is not as straightforward as it appears.

First, according to a CMS official who presented at a conference that I recently attended, CMS does not have the expertise in house to negotiate drug prices. He said that CMS would have to higher a pharmacy benefit manager (PBM) to do it for them. Since three large PBM's – Medco Health Solutions, Express Scripts, and CVS Caremark control most of this business and cumulatively represent far more lives than the number of people receiving Medicare, it’s not clear how Medicare can expect to receive significantly lower prices unless it resorts to a far more limited formulary like the VA does.

A Europe based pharmaceutical executive recently told me that most other countries allow two drugs from a given category on the formulary – one based on price and one based on efficacy with the efficacy based drug generally priced about 10% higher. In theory, I suppose we could have every brand name statin drug submit a bid for how low it would be willing to sell to CMS in order to be included in the formulary. One or two could be chosen and the others would not be covered at all. Or, if CMS opted for a tiered formulary, it could ask for bids to be included in the first tier, second tier or third tier.

The same CMS official that appeared at the conference also made the point that some drugs may work well for 60% or 70% of the patient population that needs them but a different drug in the same category might work better for the others. If you’re in the group that needs the drug that didn’t make it onto the formulary, tough, I guess. You get to pay for it yourself or, at best, you have to pay a much higher percentage of the cost.

With respect to generic drugs, which now account for about 65% of all prescriptions (but less than 20% of the dollars spent on drugs), these are actually already cheaper in the U.S. than they are in other countries, according to McKinsey.

Finally, the ultra expensive new biotech drugs to treat cancer and other diseases are the fastest growing piece of the drug industry. If there are no substitutes, drug companies would price them the same or close to the same throughout the world. The choice each country would then have to make would be to decide whether or not to pay for it based on cost-effectiveness criteria or QALY metrics. That is, if it only extends life by a couple of months but costs $100K for a course of treatment, perhaps we should just say no to payment even though it has FDA approval. Personally, I support this approach but we as a country do not seem prepared to go there, at least not yet.

With respect to devices, you have focused in the past on whether they extend lives or not. In the case of stents, for example, even if they don’t extend lives or reduce the incidence of heart attacks, if they significantly reduce the frequency of angina, that’s no small matter to a heart patient. Angina is not only uncomfortable, it creates anxiety as well. Reducing its frequency is, I think, a significant quality of life improvement even if the research might show that it doesn’t result in a longer life than less expensive medical therapy might. The most popular measures used to compare healthcare system quality across the world are infant mortality (which has significant definitional issues that vary among countries) and life expectancy. Quality of life issues, including pain and anxiety reduction are not addressed because, presumably, they can’t be easily or accurately measured. However, to those of us affected by them, they’re important and worth paying for, at least up to a point.

[The Happy Hospitalist]

By the way, I am quite-so-happy, since I, as a hospitalist, have left the economics of Medicare and am being paid based on market factors (the real ones). My economic experience as a hospitalist is nothing like the out patient comprehensive care docs who are suffering into extinction because of the flawed payment systems of Medicare. When you try and tell me, a physician, that I should accept what ever payment is given to me because I took an oath. I'm calling you to step off your high horse and return to reality. Doctors make a living and earn money just like every other profession in this country. My oath has nothing to do with my paycheck. If you want to call me greedy for screwing granny, granny has no more a right to my services than she does to yours. If I choose to tell granny it's up to her to find another sucker doctor willing to book another 10 people a day just to maintain revenue neutral, so she can sit in their waiting room for 3 hours, that's my right. And it's her right to struggle to go find another doctor still willing to accept financial ruin. Eventually, when comprehensive care docs all exit the system, the change necessary to save the field will occur. Until then, your position that docs should just accept it because we took an oath is the reason we are in the position to begin with. Because the comprehensive care docs have accepted their own financial demise and not stood up for themselves. It's time they did so. And the only way to do that is to screw granny. Because an angry granny has far more political clout than an angry doctor. An angry screwed over granny is the only way change will happen. Until then, when her doctor fires here from his/her clinic she can get in line for that 3 month waiting list at the federally funded, subsidized clinic (that's what the wait is in my neck of the woods). Or she can go to the ER like everyone else.

[The Happy Hospitalist]

As you say:
"Actually, if you want to go by what the "market" says a hospitalist is worth, here is the most recent data from Merritt Hawkins a national health care search and consulting firm specializing in the recruitment of physicians in all medical specialties."

According to Merritt Hawkins, in 2007, a hospitailst could expect to earn $145,000 a year at the low end while the average was $180,000."

Once again proving that data is in the eye of the beholder. My data, from my society published less than 3 months ago ( you can find it on their website) says the average national hospitalist position is fetching $193,000 for all comers, with some areas and practice types fetching well over $200,000 a year. And speaking from experience and looking at the offers that come to me every day, your $145,000 is laughable. Your $180,000 maybe construed last years numbers, but given average income for hospitalists has risen 13% in the last year, I would suggest the basis for your argument is a old data and therefore inaccurate.

As you say:
"When you say "Screw Granny" I doubt you mean that you would turn your back on an elderly couple earning $11,430 a year and tell them that if they want treatment, they'll have to pay the bill themselves, because you don't take Medicare."

If my business could not sustain itself on the backs of an insurance that paid me less than my acceptable fee, I absolutely would tell that elderly couple that they need to find another doctor. They can use the services of the county health department which is paid for by their tax dollars. They can ask their county medical society for help in finding a federally subsidized health clinic that operates on a sliding scale. They can search out free clinics that doctors provide voluntarily on their own free generous time (if they are still able to do so after working 60-80 hours)

If my business could not be operated on the substandard payment rates of Medicare, I would tell all my patients to go find another doctor willing to put up with it. And I would feel bad for the patient, but not guilty. Their insurance let them down, not me. That means patients earning 1 million a year or 10,000 a year, would both take a hike.

[maggiemahar]

Gregory--

You are absolutely right.
Pharma and contractors in Iraq are the only businesses that don't have to negotiate prices with the government.

Letting them simply set the price for their products is ridiculous. It is simply "pay-back" for campaign contributions.

Device makers also over-charge and that industry is growing by leaps and bounds.

I'll be writing about how much we spend on drugs and devices soon--and how little of that money goes into reserach.

Adding up the drugs we buy retail in pharmacies, plus the drugs we pay for when we're in the hospital, drugs administered in doctors' offices and all of the devices (artifical knees, stents, etc.), my back-of-the envelope estimate is that drugs and devices acount for as much as 15 percent--maybe more--of our health care bill.

Cut those prices by a third, and you reap a huge savings. (My guess is that if you just look at Medicare spending, drugs and devices may account for more than 15 percent of the total since seniors are more likely to be over-medicated (on 8 or 9 medications) and much more likely to undergo procedures that involve installing devices.)

[maggiemahar]

Everyone-- thanks for your comments:

Dear Not-So-Happy Hospitalist--

I'm sorry to have upset you. I think this all started when I said that I thought the "Screw Granny" (and turn your back on Medicare patients) is not the solution to the threat that Medicare would slash phsycians' fees, across the board.

You responded with a rant about how the oath you took as a physician does not require you to "live in poverty or be a slave . . "

The hyperbole, combined with the belligerence ("bullshit--I'm calling you on it). . was startling---especially because I made it clear that a)I don't think Medicare should slash fees 10 percent across the board and b)I very much doubt that Congres will do so. There's no need to get so excited.

But Medicare is running out of money. (The trust fund that pays hospital bills started paying out more than it takes in in payroll taxes 4 years ago. In 11 years it will run out of money and not be able to pay those hospital bills.)

I know you feel that this is not your problem. It's "the government's problem." But it is everyone's problem. When you say "the government" should fund X, Y, or Z, who do you think the government is? The funding comes from taxpayers.

Medicare taxes are already pretty high for median-income ($53,000 jointhousehold ) Americans. Medicare co-pays and deductibles are getting steep--expanding much faster than Social secruity.

Half of all seniors on Medicare have incomes below $20,000 according to MedPac's 2007 report. Eighteen percent had incomes less than the poverty level (defined then as $9,060 for people living alone and $11,430 for married couples), and 49 percent had incomes at 200 percent of the poverty level or below ." (Income includes every dollar that comes into the household: Soc. Security, dividends interest, capital gains, wages, food stamps, whatever.)

When you say "Screw Granny" I doubt you mean that you would turn your back on an elderly couple earning $11,430 a year and tell them that if they want treatment, they'll have to pay the bill themselves, because you don't take Medicare.

There are solutions to Medicare's fiscal problems--cutting the waste, cutting out unncessary tests and procedures, negotiating lower prices for drugs and devices, etc.

And, some specialists fees should be cut for certain services--particuarly servcies in "grey areas" of medicine where we have no evidence that the procedure provides Any Benefit whatsoever.

You write: " The fair price for a physician is the price the market will bear. For hospitalists, that number is approaching $200,000 a year, because that's what the market says it's worth."

Actually, if you want to go by what the "market" says a hospitalist is worth, here is the most recent data from Merritt Hawkins a national health care search and consulting firm specializing in the recruitment of physicians in all medical specialties.

According to Merritt Hawkins, in 2007, a hospitailst could expect to earn $145,000 a year at the low end while the average was $180,000.

These are not salaries set by the government. These are the salaries hospitalists fetch in the competitive market.

As it happens, I think that $145,000 is low for someone who graduates from med school with, say, $250,000 in loans, is in
his or her early 30s and may well want to buy a home and start a fmaily.

In other words, I don't believe that "the market" is a fair aribtrer of what doctors need to be paid. Some are over-paid for certain servcies; others are underpaid.

To say that doctors should be paid "what the market will bear" is to say that doctors treating the most desperate patients should be paid the most.

For insterest, by that logic, a pediatric oncologist whose "market" is comprised of the parents of dying children should be able to earn a million, two million a year. There is no limit to what those "customers" will "bear" to raise whatever you ask to try to save their children: selling their home, bankruptcy, whatever.

The difference between healthcare and most other markets is that the customer has little leverage. He can't postpone the purchase until the price comes down. When it comes to big-ticket items (and most of our healthcare dollars are spent on big-ticket items for seriously ill patients) he doesn't want to "bargain-hunt"--even if he has time to comparison shop. If you need heart surgery would you want the guy who charges 30 percent less, because he has relatively little experience--or because he's getting on in years, has gotten forgetful, and so can no longer "command the big bucks"?

In order to encourage more doctors to become primary care docs, hosptialists, family docs, and palliative care docs I have often said that I would like to see all or part of their med school loans forgiven if they go to regions of the country where there is a shortage in their specialty.

Other developed countires pay for the cost of medical education because they recognize that health care is a public good. Doctors earn about half of what they earn here (after adjusting for differences in cost of living, salaries in other professions, etc.) but they, too, see medicine as a public good, and do not emerge from med school with a crushing burden of debt.

I suspect that it is the debt that makes some young doctors sometimes sound bitter. It's a very hard way to start a career.

Jenga-- Unfortunately Indian Services has always been an embarrassment to the nation. There is really no connection between Indian Services and the VA --completely different administration, rules, etc. But I'm sure Indian Services could use the reforms that helped upgrade the VA so much in the 1990s.

I can imagine that it's discouraging to work in that setting, but it's good that young doctors like you are willing to do this work.

Denis--
You're right, American workers earn less than did
they did years ago. Even in prosperous times, shareholders and the highest paid Americans have taken a larger and larger share of the pie.
This has made economic mobility more and more difficult.

[Gregory D. Pawelski]

It is no mystery why prescription drug costs are vastly lower in Canada and Europe than they are here in the USA. Foreign governments negotiate with the pharmaceutical companies on drug prices. The result is that the pharmaceutical companies still find it profitable to sell drugs outside of the USA at 30% to 50% discounts, compared to U.S. drug prices.

Congress created the Medicare Part D prescription drug benefit. This law did two things: it guaranteed premium pricing for pharmaceuticals, by prohibiting Medicare from negotiating drug prices, and it provided hundreds of billions of dollars in U.S. taxpayer subsidies to pay for these premium drug costs.

Congress raised the specter of rationing, citing the VA experience when this agency was authorized to negotiate drug prices. The VA is a very small segment of the health care market. The drug makers make a calculated decision not to have the public relations nightmare which would occur were it known that they could still make adequate profits by selling drugs at steep discounts within the U.S.

But Medicare is so huge that the pharmaceutical industry would not walk away from this market, any more than it walked away from the Canadian or European markets. There is no problem with drug availability in Canada or Europe, and there would be no problem with drug availability within Medicare.

Even defense contractors and space agency contractors have to negotiate pricing with the government. The only industry which apparently gets to set its own government pricing, outside of the pharmaceutical industry, is the Iraq contracting industry, led by Halliburton. Every other industry has to negotiate.

Simply give Medicare the ability to negotiate drug prices, and drug prices for Americans will go down, while those for the rest of the world will eventually go up, and there will be a more equitable sharing in the global costs of pharmaceutical research and marketing.

[jenga]

I will echo Happy. Everyone mentions the VA funny how know one ever mentions the Indian Health Service a Government run Healthcare Mecca that it is right here in the ole US of A. Their stats would be great in subsahara Africa. I can tell you right now if I work for a salary what I'm gonna do. Instead of seeing 60-70 people a day that I currently do and I never say no to another physician or patient. I'm gonna show up 15-30 minutes late, see one patient take a 15 minute coffee break, see another take a 15 minute phone call from an old buddy, see another and talk about sports, wheat whatever, then take off for lunch. After I come back from lunch 30 minutes to 1 hr late, I'll see another make some more phone calls, see another check my email for an hour or so, see another and talk for 45 minutes on how much rain we've had then call it a day. Oh all of those phone calls for patients that wanted to squeeze in sorry it's 5 and I'm not on call tonight go to the ER. Sure you can replace me, in about 10 years. Our hospital doesn't have enought to take call as it is, you want to knock one more off the list? Want to see that duplicated thousands of times across the country? And I'm one of those fresh young docs that is so ready to change the world and get rid of the "dinosaurs". HA
Add 40 million to the system, Encourage Docs into early retirement, Salary them so they could care less about working hard, are you trying to make people wait for a year or is it two before they see their physician?

[Denis Drew]

Doctors are getting caught up in the race to the bottom that has robbed it patients, American labor, of its share of the growing economic pie over the last 35 years -- earners under 25 percentile have actually fallen behind inflation. The minimum wage of 1968 (adjusted) is unbelievably the 25 percentile wage of today: $10/hr) -- double the average income later.

The rich don't grow any more livers or teeth to treat as they get richer.

[The Happy Hospitalist]

Maggie, I thank you for quoting my oath to me.
"That you will be loyal to the Profession of Medicine and just and generous to its members.

". That you will lead your lives and practice your art in uprightness and honor.

". That into whatsoever house you shall enter, it shall be for the good of the sick to the utmost of your power, your holding yourselves far aloof from wrong, from corruption, from the tempting of others to vice. "

To bad the oath doesnt' say I should work for free or less than cost. The fact that comprehensive care doctors are being paid at submarket prices is testament enough to their overwhelming generosity. The fact that doctors see patients everyday without insurance is testament enough to their over whelming generosity. Telling me I'm not generous because I wish to be paid appropriately for my experience, expertise and education is simply grandstanding. I'm generous far beyond any professionals wildest dream. The fact the nurse anesthiologists make more than comprehensive care doctors is testament enough to the generosity of comprehensive care doctors.

Maggie, You will have to define for me what you believe to be a fair amount of money for comprehensive care doctors. What I believe is irrelevant. Once one has basic necessities met, lifestyle is more related to expenses than revenue. But more importantly, the masses of medical students believe that comprehensive care is not "generous" enough for them in the wake of their $200,000 loans and fare inferior compensation of the specialties available for their liking. It's time to get off the hi horse. The far price for a physician is the price the market will bare. For hospitalists, that number is approaching $200,000 a year, because that's what the market says it's worth. For outpatient comprehensive care doctors, who are being royally screwed by our government payment formula, that number is far south of $200,000. But based on the lack of supply coming from our medical schools, it should be rising quickly. But it isn't, because of the flawed payment systems. So you ask me what is fair. Fair is what puts supply and demand back in balance. And that number is far north of the current $150,000 for comprehensive care.

The assumption that hospitals aren't there to make money s absurd. Your example, I would bet is a fleeting example and not the norm. Get out of of the academia meccas that generate billions of dollars in research grants and billions more for harboring residents and convince me that the majority of community hospitals aren't trying to drive revenue. Then you've got me hooked.

Also, remember, when you're salaried and have a guaranteed salary, billing medicare for a level 1 visit is far easier than billing them for a level 3. You don't care how much money you collect for your employer. Your salary is guaranteed. It's no wonder the cost to medicare is less. It's because the docs don't care what they bill.

As far as outcomes at VA's being better, I would suggest it's easier having better outcomes when you are fully salaried, seeing 15 patients a day instead of 25. Lazy is a relative term. It also means not
fitting someone into your schedule". It means waiting months to get an appointment. That was my personal experience. But the assumption that salaried docs don't work less and see less patients is living in a fantasy world. Show me the data that salaried docs see just as many patients. I've shown you data to the contrary in hospitalist medicine.

You also state:
"No doubt, some people don't work as hard if they are on salary. But my guess is that this is less likely to apply to doctors than to many other jobs."

My experience says you are dead wrong on that guess.

I agree completely with culture being important at an institution. That's why I'm so against government run health care.

[maggiemahar]

Barry--

The Happy Hospitalist's experience at the VA is unusualb This doesn't mean he is wrong about what he saw and experienced. There are a great many VA hosptials; no doubt there are some where management is poor and the culture is sour.

But: Read the book: "The BEst CAre Anywhere" andsee the medical reserach cited. Overall, in the late 1990s, the care was excellent--and still is, given budget contraints.

As for Kaiser, it has been very successful in Colorado and Atlanta. Have you ever read the healthcare book written by George Halverson?

I know, I sound like a librarian: read, read, read. But this really is the best way to get solid information.