Fixing the System – Where do we start?

This is another piece that takes a bite out of the ideas of writer Atul Gawande. One thing we haven’t looked at are the diverse systems that can be found internationally that seem to work. The British system uses a purely governmental-run healthcare system called the National Health System. Canada uses a government-run health system established in 1966. Sweden uses a privately run health insurance model with insurance mandates like US car insurance. France uses a payroll-tax funded private insurance system.

The interesting part is a lot of these systems seem to work, and a very fair question is – can these systems work in the US too? Well in this article titled “Getting There From Here,” Atul Gawande argues that these systems could work, but that doesn’t mean every country should model their system off of any particular example. Interestingly, his argument is that these systems weren’t developed because some bureaucrat decided to mandate a certain health system, they were developed because of the circumstances of the country at the time – incidentally a lot of these circumstances were in connection to World War II – and so is ours (see a previous posting: Employer-Based System).

Again, just like last time with the Two Towns posting, this will be a slight summary of Dr. Gawande’s main points, so I highly encourage you to read the source article to help formulate your own opinion.

Back in the 1940s, the British system consisted of a variety of hospitals and health insurance systems. London was obviously the most concentrated UK city of the time; however, when Germany starting its bombings of London, the government needed to evacuate millions of its citizens out of the city and into the smaller towns. This created a large strain on its healthcare system, and the only way to create the infrastructure to care for the large healthcare needs of its citizens in these suburban and rural areas, the British government had to build all of its own facilities and employ the providers itself (this is much like the US military’s Veterans Administration healthcare system). Amid the bombings, the private infrastructure in London was destroyed, and by the time the war ended and the rebuilding of London ensued, the government took it upon their own shoulders to again build-out the infrastructure of London’s healthcare. Ergo, by the time any real debate about healthcare started to happen, the government was already running its own healthcare system. It was a natural extension for the UK to continue using its government-run healthcare.

The French system developed in a different way. Before the war, large manufacturers and unions had organized insurance cooperatives through a payroll tax. By the time France set to rebuild its country post WWII, it simply expanded on this already existing insurance system. Nowadays over a hundred non-profit, local insurance funds serve as the basis of France’s healthcare system

The other example that Dr. Gawande presents is the Swedish system. Because they chose to be neutral, it was not ravaged by the war the way the rest of Europe was. The private sector continued to chug along during the war, and consequently their system built upon its history of private sector involvement.

The US system developed into the employer-based system because of the laws and restrictions implemented during the war. For a detailed description of how it developed, please go back and read the piece on the “How did we end up with the Employer-based system?” So ultimately, the conclusion of the article is that we should not push ourselves to be a national payer system like the UK. Nor should we abolish the employer-based system and turn into a Swedish private model.

I know this concept doesn’t make a whole lot of intellectual sense. If a system is bad to begin with, why don’t we scrap it and go with something else that is better? Atul Gawande goes on to describe a few more examples of this “path-dependence” including VHS vs. beta-max (a superior technology to VHS), the telephone system, the gasoline-based transportation network. Sometimes nations are too far down one path to turn it around, and any such upheaval of the existing system can pose serious risks (like Mao’s Great Leap Forward).

Our country is built on a patch-work of 1) the employer-paid piece, 2) the government-paid piece for seniors (Medicare), 3) government-run piece for veterans (Veterans Administration), and 4) the federal/state government-paid piece for the poor (Medicaid). Any realistic/pragmatic expansion would build on these already-existing programs. Indeed, just earlier this morning, the Senate is pushing a package through that will expand Medicaid and establish a new health insurance exchange that will help solve the broken individual market. They are building on what already exists; not by intellectual choice, but by practical necessity.

Model Health Systems

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As broken as the American health system is, there truly are pockets of amazing systems that we can look to: Intermountain Healthcare (Utah), Geisinger Health System (PA), Kaiser Permanente (primarily CA). These guys deliver technologically advanced care with better outcomes, lower costs, and happy employees. It is worthy to note that they’re all non-profit entities as well. I’ll be honest – I haven’t personally visited any of these systems, so my information is admittedly second hand. I have, however, spoken to key figures in some of these systems and read numerous studies and anecdotes about these systems, but the point isn’t whether or not these systems are better – the question is HOW are they better. So what’s the secret sauce?

The crucial pieces of their success are cooperation and motivation. Normally, a patient’s care can be done in numerous settings – a hospital, a primary care physician, multiple specialists all in different places, and possibly even other places like a long-term care facility or nursing home. These entities bring together the key elements of care – the hospital, the primary care physician, the specialists, and the payor (ie. the insurance piece). Instead of shuffling the patient back and forth among provider settings with disparate patient records and an inherent dependence on patient’s memory, understanding, and effort, these places bring the care TO the patient. With the patient’s primary care physician always nearby, a full team of specialists can communicate with each other to discuss a patient’s issues and treatment. Think about that – each physician gets to see a variety of cases and gets more experience than the average individual specialist can, and they get the benefits of practicing together as a team and pooling their knowledge. Now the cardiologist can speak directly with the radiologist and primary care physician to get a quick, efficient understand of the issue on top of knowing the patient’s history and current medication. Just avoiding the common errors alone (conflicting medicines, mis-diagnoses, repeated tests, etc.), these systems easily give care that is better, faster, and more cost-efficient. Of course, we’d all love if all healthcare delivery systems could do that, but how do the physicians get the motivation in place?

Remember that most physicians get paid on a per-service basis. Each test they order, each service performed means more revenue. There is no pecuniary motivation to spend extra time speaking with the patient to ensure they completely understand the instructions or taking extra time to speak with other specialists to double check themselves etc. What these systems do is to employ the physicians. The physicians get paid more than the average physician would earn on their own, and they are given the freedom to practice the way they want to – to give the patient the best care without an eye on how it impacts their own financial situation. Essentially, the financial motivation for more services is taken away from the physician. The pursuit for the intellectually-correct care is the main goal for most of these guys.

For the hospital, the motivation is different as well. Instead of a fee for service basis, this ultimately boils down to a single basic principle – capitation. These systems are given a fixed amount of money to care for their patients. The more money they save, the more money they get to keep. That means that they’ll be very mindful of waste, inappropriate uses of services, and long-term health of the patient. In short, they are taking on insurance-type risk.

So why is this system the El Paso rather than the McAllen? Can it be transported elsewhere?

1) It takes a certain type of physician to be successful in this environment. They’ll do well financially by hitting doubles, but they won’t be given the opportunity to swing for the fences.
2) Patients need to buy into the program. They need to accept that they’ll be funneled into a specific hospital system and only get to see a specific set of physicians. They won’t be given a vast choice of doctors to choose from.
3) Employers need to be small-mid sized companies that are either local or regional employers. National employers have no use for such a narrow network, so the addressable market is much smaller.
4) Hospitals will need to redesign themselves. Integrating physicians into the entity, spending more money than ever on information technology and capital expenditures, renegotiating the fundamental way they are compensated.

In short, it is pretty hard for a system like this to start up, but it’s certainly possible. Some of the Medicare Advantage health insurers have some pretty deep and integrated HMOs, so perhaps we’re seeing advanced health systems in their nascent stages. Or perhaps that’s wishful thinking – after all the promise of HMOs as the savior to the health system has been around since the 1990s.