The Perfect Storm of Overutilization is a paper that appeared in the Journal of the American Medical Association on June 18, 2008, in vol. 299, no. 23.
Two authors are credited: Ezekiel Emanuel, MD, PhD, and Victor R. Fuchs, PhD.
In this paper Dr. Fuchs and Dr. Emanuel claim that the United States suffers from "overutilization" of health care, which drives up costs. They examine possible causes of that overutilization. In this post I will try to list their points as fairly as possible, though I will take issue with some of their ideas.
Their thesis is set out in the opening paragraph:
"A "perfect storm" occurs when a confluence of many factors or events--none of which alone is particularly devastating-- creates a catastrophic force. Such confluence is rare and devastating. Over time and through disconnected events, U.S. health care has evolved into a "perfect storm" that drives overutilization and increases the cost of health care."
Drs. Fuchs and Emanuel first describe some other factors that they say affect U.S. health care costs:
"Because health insurance must be underwritten and sold to individual employers and self-insured individuals, administrative costs exceed $145 billion...One estimate suggests that the private employer insurance market wastes more than $50 billion in administrative costs."
This might well be true, but I fail to see how a nationalized health care plan would solve this problem. Wouldn't it simply transfer the administrative cost to the federal government? Transferring the cost does not make it disappear. Indeed, it strikes me that the infrastructure required to maintain a nationwide system of claims and referrals would dwarf the staff size of any private company.
Further, a government program would be a non-profit enterprise. It would be insulated from market imperatives to cut cost and reduce waste in order to compete and make money. With no competition, could become even more wasteful.
The authors go on to list another price driver:
"A second factor is higher prices in the United States for important inputs to health care, such as physician's services, prescription drugs, and diagnostic testing. U.S. physicians earn double the income of their peers in other industrialized countries. Similarly, prices to the public for drugs in the United States are 10% to 30% higher that in other developed countries."
As to the claim of higher drug prices, my understanding has been that this is because drug companies are forced to negotiate with state-run healthcare providers in other countries and the result is a lower price abroad. The lost profits are then recouped by charging higher prices in the United States.
If there is no "market of last resort" in which to make up for lower prices in other countries, how will this affect drug research and production in the U.S.?
Or is my understanding of the pricing mechanism for pharmaceuticals incorrect? I can't claim to be an expert on this topic.
The doctors then identify a third cost factor:
"A third contributor to U.S. costs is the abundance of amenities. Hospital rooms in the United States offer more privacy, comfort, and auxiliary services than do hospital rooms in most other countries. U.S. physicians' offices are typically more conveniently located and have parking nearby and more attractive waiting rooms."
As I said in Part Two of this series, Dr. Emanuel seems to express himself poorly at times. No matter what his (and Dr. Fuch's) good intentions, this paragraph comes across as sullen, resentful, and dismissive of a sick person's need for physical comfort.
It's so breathtakingly clumsy it becomes rude.
Anyone who has tried to buy a house or rent an apartment knows that good locations with adequate parking come only at a price. Furniture can be costly, too- whether intended for a home or an office. These expenses are part of the cost of doing business for a private pratice.
And there is a cost of doing business because the practice is private. It is competing for customers like any other business, and one way of competing is to offer better amenities. If that competition results in better surroundings for sick people, I have no problem with it.
Do the doctors really mean to imply that the United States should cut healthcare costs by making doctor's offices and hospital rooms unpleasant and inconvenient? I find that hard to believe.
I hope this is just awkward, thoughtless writing.
Having listed these other forces in cost of U.S. health care, Drs. Fuchs and Emanuel proceed to what they believe is the most important factor:
"The most important contributor to the high cost of U.S. health care, however, is overutilization."
The doctors then define two main types of overutilization:
1.)"...higher volumes, such as more office visits, hospitalizations, tests, procedures and prescriptions than are appropriate.."
2.)"...more costly specialists, tests, procedures and prescriptions than are appropriate."
In their view, the chief overutilization problem is number two: more costly care.
In making this point they return to the issue of pharmaceutical costs and also cite statistics saying that Americans receive more cardiac revascularization procedures (this includes heart bypass surgery and stents), and says that there are "almost 3 times as many magnetic resonance imaging scanners in the United States as the OECD average, higher only in Japan."
These statements raise a few questions in my mind. First, the higher rate of cardiac procedures would indicate a higher rate of cardiac disease in the population, wouldn't it? Medical experts are constantly chiding Americans about their poor eating and exercise habits. Is the incidence of cardiac disease simply lower in some other countries, leading to fewer surgical interventions?
Also, if the United States has 3 times as many scanners as the OECD average, it might do to remember that the United States also has far more land mass and far more people than many OECD countries. It seems as though this alone would make more scanners necessary and not a wasteful luxury.
The authors identify "At least 7 factors [that] drive overuse, 4 related to physicians and 3 related to patients."
I'd like to list these 7 factors point-by-point.
1.) Physician culture.
The authors complain that medical training is structured to reward thoroughness:
"When evaluating a patient, students, interns and residents are trained to identify...all possible diagnoses and tests that would confirm or exclude them...Trainees who ignore the improbable "zebra" diagnoses are not deemed insightful."
Doctors, they say, are trained to be "meticulous" instead of "thoughtful". They continue:
"This culture is further reinforced by a unique understanding of professional obligations, specifically, the Hippocratic Oath's admonition to "use my power to help the sick to the best of my ability and judgement" as an imperative to do everything for the patient regardless of cost or effect on others."
In the interest of full disclosure I should point out that three of my nearest and dearest have been saved by "zebra diagnoses": a blood test that led to the discovery of a rare (but treatable) form of cancer, an infection of the heart sac masquerading as "a real bad case of flu," and a structural abnormality in the brain that must be monitored as a possible anuerysm. In each case, a "meticulous" doctor came to a life-saving conclusion.
So I'm a bit biased.
I will say only this: I want my doctor to be "meticulous" and "thoughtful."
2.) The fee-for-service payment structure.
Drs. Fuchs and Emanuel are not alone in criticizing this aspect of the U.S. healthcare system; pundits on the right and left have been discussing it ever since healthcare reform was first proposed. The authors are firm in saying that "most physicians are not income maximizers," but admit that there is an incentive to overtreat.
"The financial incentive for physicians to order and perform more expensive procedures is compounded by marketing. Physicians face a paradoxic situation. They are flooded with information...Simultaneously, there is a paucity of data comparing different treatments and interventions."
Here both the authors and U.S. doctors have my sympathy. Anyone who has ever sat in a doctor's waiting room watching the pharma sales reps come and go or looked at the sliding stacks of glossy brochures piled in examining rooms realizes that doctors are bombarded from all sides by information. Not just drug marketing but new scientific studies and papers describing new treatment procedures.
The authors don't really propose a solution to this and I don't have a suggestion, either. I wish someone did.
4.) Defensive medicine.
The authors quote "some experts" as estimating that defensive medicine add 5%-9% to medical costs. This comes in the form of malpractice insurance as well as the ordering of extra tests and procedures to avoid litigation.
Having discussed the pressures on physicians, Drs. Fuchs and Emanuel turn to factors that they think influence patient behavior.
5.) Patient demand for expensive, high-tech treatments.
"U.S. patients prefer high technology over high touch...U.S. culture emphasizes the new and the fancy; old and plain is equated with deprivation."
I think there is some room for argument here. The soaring popularity of yoga, acupuncture and homeopathic treatments has led to "alternative therapies" being included in proposed healthcare reform. And is a fascination with medical advances a net loss? When combined with market competition, can't it lead to newer and more effective treatments?
I would suggest that American medical culture is a healthier blend of "touch" and "technology" than the authors suppose.
6.) Direct-to-consumer marketing.
"Pharmaceutical companies spend more than an estimated $4 billion annually advertising prescription drugs, with the concluding advice of "talk to your doctor about..." These ads drive patient's requests for new and more costly medications.
This might well be true, but as a patient who has absolutely never "asked her doctor about..." any advertised drug, I wonder if there are any figures to back this statement up? Do any companies regularly survey doctors about which medicines are requested by patients? Any industry spending $4 billion on ads is surely tracking the effectiveness of those ads.
I would be interested to see these figures.
7.) Third-party payment for services.
"In normal markets, demand is modulated by cost. But third-party payment for patients attentuates this control. Although patients experience deductibles, co-payments, and other out-of-pocket expenses, health insurance and government programs signifigantly shield patients' decisions from the true costs of health care."
Before I react to this statement, I'd like to remind readers that this (co-authored) paper was written to describe factors increasing the cost of health care. It was not written to advocate nationalized health insurance.
With that said, it does seem strange to me that the same man who critized government programs for "shield[ing]" patients from the "true cost of health care" would now be heavily involved in the process of designing an expanded government program.
This paper was written a little over a year ago. If 'government programs' were driving up the cost of healthcare in 2008, why should they suddenly become the solution in 2009?
Drs. Fuchs and Emanuel are basically saying that insurance makes us greedy:
"When physicians make money on interventions and patients pay little for them, cost becomes largely irrelevant."
If this statement were true- if patients actually paid "very little" for interventions- why would anyone be attempting to "overhaul" U.S. healthcare? Is this not the desired aim of national healthcare- affordable care for all? If many people paying little for services increases costs, wouldn't all people paying little increase costs even more?
The authors contend that insured American are not "sensitive" to the true cost of health care. I disagree. Yes, with a good plan treatment for life's ordinary woes- sinus infections, flu and the like- can be very affordable. But over time, even those copayments add up.
There is a hidden cost as well, a cost the authors do not address. A visit to the doctor's office often means time away from work. Repeated "interventions"- no matter how inexpensive they appear on paper- can cost an employee job security. Extended hospital stays take a toll on families in terms of child care and other responsibilities.
And there is no joy in worrying about the kind of discomfort caused by some "interventions."
The suggestion that Americans are thoughtlessly frittering away expensive healthcare resources is risible. The authors are too focused on costs to the healthcare system to see the true range of costs to the consumer.
I believe their lack of perspective on this front leads to the following statement:
"One step is for more value-based co-payments, modeled on current tiered pharamaceutical benefits, that link the amount patients pay to effectiveness and cost of alternatives."
This is an invitation to "good enough" medicine rather than "best outcomes" medicine. "Good enough" medicine tells Patient A and Patient B to use the same generic inhaler to treat their asthma. The generic inhaler will give Patient A and B decent relief and it doesn't cost much.
"Best outcomes" medicine recognizes that Patient A is also a competitive swimmer, and that competing athletically is an important part of Patient A's quality of life. "Best outcomes" medicine gives Patient A affordable access to more intensive asthma treatment, which will enable Patient A to continue competing.
"Good enough" medicine treats the most common symptoms of a disease with the least expense. "Best outcomes" medicine treats the patient, basing that treatment on the patient's unique character and quality of life.
To their credit, Drs. Fuchs and Emanuel touch on this issue:
"It would help if patients were financially sensitive to the cost of care, but not if out-of-pocket costs inhibit use of needed services, resulting in higher costs later. This is not an all-or-nothing rationing scheme, but rather an ethical way to have patients experience costs but not at the expense of important outcomes."
Unfortunately, that "ethical way" will be based on someone else's idea of "needed services" and "important outcomes."