Lots of chatter among my clinical colleagues about two main topics: Amazon getting deeper into the health space and the State of the Union address.
The Amazon topic definitely got a lot more traction, namely because of comments that the Amazon, Berkshire Hathaway, and JPMorgan Chase venture would be “free from profit-making incentives and constraints.” Many physicians blame the current healthcare crisis not only on hospitals trying to make a buck, but on payer executives focused on shareholder profits and their own career advancement. Healthcare industry stocks declined, including Express Scripts, CVS Health, and UnitedHealth Group.
The new company was also quoted as planning to center on “technology solutions that will provide US employees and their families with simplified, high-quality, and transparent healthcare at a reasonable cost.” There is an incredible amount of waste in our healthcare system, with estimates of up to 35 percent lost through several categories. Don Berwick broke the categories down in his 2012 piece on “Eliminating Waste in US Health Care” and I don’t know that they’ve changed significantly since then:
- Clinical waste (14 percent). Could be improved with high-quality care, use of cost-effective treatments, or standardization of best practices.
- Administrative complexity (9 percent). Could be improved through standardization of billing and collections, credentialing, and compliance.
- Fraud and abuse (7 percent). Payments for services not provided or billed by deception.
- Excessive prices (5 percent). Could be improved by tying prices to efficiency, outcomes, or fair profit.
There are some interesting findings in those numbers. Many of the laypeople I encounter assume that the entire problem with healthcare is with excessive prices, because they see the prices that hospitals and healthcare providers charge and the dramatic reductions through allowable charges and other adjustments. The higher “list” prices are often billed directly to patients without insurance if they don’t know to specifically request a cash price or adjustment.
Health-related businesses should be able to earn a fair profit, I don’t dispute that, but then there are the stories of price gouging, particularly in the drug industry. There are games that manufacturers play, such as purchasing a generic and finding a way to get a new patent so they can raise prices and control the market. Then there are unconscionable acts, such as grossly inflating the prices of medications that cost modest amounts to produce.
Those sources of waste, even coupled with the nefarious category of fraud and abuse, still pale in comparison to the losses via administrative complexity and clinical waste. I spent a good chunk of my clinical day trying to talk patients out of treatments they don’t need even though they think they do because they heard about them on TV or read about them in an article about “things your doctor doesn’t want you to know.” I also watch patients pay urgent care prices for treatments that should be performed in the primary care office, where they can’t get an appointment because we have a serious shortage of primary physicians in our community. I watch our practice spend incredible amounts of money on the billing and collections process, dealing with rejections, denials, and other attempts by payers not to actually pay. We experience these things on a daily basis while we work with patients who lack the resources to get the care they need. I can’t help but think the disconnect between waste and need contributes to the burnout that many of us feel.
When we hear that someone as upright as Warren Buffett wants to get into the fray, we can’t help but be hopeful. And despite what one may think about Amazon and their takeover of the marketplace, the company does seem to get things done and provide excellent service, which people crave. And when it sounds like they’re going to try to take down payers, which many of us find cocky and distasteful, that makes it even better.
The devil is in the details with an endeavor like this one, and it remains to be seen if they can make a difference where others have not been successful, or where they have failed to appreciate the complexity of healthcare economics.
Failure to grasp the complexity of healthcare leads us to the State of the Union address, where much was promised. Addressing drug prices will be a priority, with lowered costs and improved access to breakthrough drugs. Anytime someone talks about breakthrough drugs, many of us are skeptical – precision medicine sounds sexy, but the costs are substantial. The real savings may lie in figuring out to incent manufacturers of generic drugs and reducing the need for drugs through prevention and lifestyle change.
The State of the Union address also covered “right-to-try” legislation that would expand access for patients with terminal conditions so they can try experimental drugs that have not been approved by the FDA. It’s dramatic to talk about patients going “from country to country to seek a cure,” but in reality, the number of patients impacted by this would be much smaller than the number of patients who could benefit from basic, affordable healthcare. In some circles, right-to-try”is spoken of as cruel since treatments themselves may cause suffering with little promise of improvement. I’ve seen my colleagues in hospice care in tears while they care for patients and their families who have been given false hope.
The speech also touched on the need to address widespread opioid misuse. Since my practice just began a groundbreaking partnership with our local sheriff’s office to try to better support opioid addicts as they attempt rehab, I’m all for efforts to stop this serious epidemic. I don’t see big increases in government funding in the future, however. That’s one reason why our practice started this new protocol – addicts in our area have a high risk of relapsing before they can even make it to rehab because there are so few rehab beds available, and those that are open come with a great cost. We help bridge patients through opioid withdrawal while they try to stop using during their wait. The strategy has worked in other communities and we’re happy to bring our resources to bear.
There’s a lot going on in the industry today and frankly it’s been refreshing to hear providers talk about something other than how much they hate their EHRs and how much they think they’ve been meaningfully abused. I’m interested to hear what non-providers think about these recent developments.
Ready for Amazon to get in our business? Leave a comment or email me.
Email Dr. Jayne.