Health Care Expenses Are Out of Control

We are now officially over $8,000 per year in medical expenses for every man, woman and child in this country.  $2.5 trillion dollars.  As a percentage of GDP, we are pushing ever higher to unsustainable numbers.  By 2018, two years after the Hospital Insurance Trust Fund is bankrupt, we will be at 20% of GDP.

The solution is not to keep throwing more money at a insurance system that spends all the money in all the wrong places, the solution is to find a new model.  The current fee for service is broken.  None of the stakeholders have aligning motivations.

The "medical necessity" for which the third party payment system is based on, is a sham.  I can make anything medically necessary any time, any place by placing key words in key places.  Every test.  Every hospitalization.  Every medication.  Every x-ray.  It's all medically necessary.  Every time.

Is it necessary?  Hardly.  When you pay more to do more, you get more.  And the end result is more reactive care, not less.  Doctors only earn money by doing stuff.  They only earn money by seeing patients.  By doing procedures.  Hospitals only earn money by filling beds.  By keeping radiology equipment  at full capacity.  Drug companies only earn money when their drug is prescribed.

When all the stake holders only get paid by doing more, the end result is not rocket science.  You get more.  It is a natural selfish self interest at work.  And because the patient has given up their duty to a third party, most don't really care what or how much is done, since they, in essence are rarely paying for it.

I don't see how it is physically possible to spend our way out of this financial black hole called unfunded American health care.  All of Obama's efficiency gimmicks in the world will not prevent doing more to a patient when doing more is the only way anyone gets paid.  To believe that technology can save us is to believe in the tooth fairy.  Technology will simply make it easier for me to do more.  To become more efficient at bankrupting our health care resources.  I contend that technology which makes my life easier in a fee for service will make health care in aggregate more expensive, not less.

Why can't we do less and get paid for it?  Why can't we downgrade our need for more by dismantling the fee for service?

Imagine how much health care $8,000 could buy.  Remember, the value of these figures are highly skewed to a small percent of the population.  5% of our population spends 1/2 that 2.5 trillion.  And 50% of our population only spends 5%.

We are highly subsidizing the chronic disease of the few.  The few who hoard expensive hospital stays and procedures that line the pockets of everyone involved.  Instead of paying all parties more to do more, we need to stop the madness.

I have a better solution.  A solution that lines all the forces, and puts the patient in control.  There are several facets to the plan.

1. Deregulate the Industry "Protecting" The Patient.  We can't afford the current protectionism that treats the patient like a baby.  Give them the control to prescribe their own medication.  To order their own labs.  To order their own x-rays.  The results of which are the property of the patient.  It's their body.  Should they wish to pay a professional to interpret the results or give recommendations on the medical management of their disease, that is their choice.  But to deny a patient the right to medications they wish to take while we have far more dangerous lifestyle choices that kill thousands of people every day is hypocritical.  Deregulate the protectionism that prevents the patient from making their own decisions about their own body.  This act alone could save billions in unnecessary office visits under the current fee for service model.  Of course, if you order it yourself, you pay for it out of your own pocket.  That's how the rest of capitalistic America works.  
2. Abandon the Cottage Industry of Medical Care.  Economies of scale create efficiencies of scale. Maintaining autonomy won't matter when you are bankrupt.  At the rate we are going, nobody will be able to afford any care and having an inefficient model of delivery means you are contributing to the collapse.  It's time to partner up if you want to survive and thrive.  
3. Abandon the Fee for Service Model.  Fee for service works when patients pay out of pocket.  When patients have their own selfish self interest deciding how they want to spend their money, the collective will of 300 million Americans are able to control costs.  But when a third party is paying for it, the natural selfish self interest doesn't care.  As long as someone else is paying for more, the collective actions of 300 million Americans means more health care and more expense on our way to 20% of GDP.  And that selfish self interest is driving the costs to unsustainable levels.  The fault lies with all parties.  Hospitals, patients and physicians.  Cost is that little freak at the circus that is tucked away in the back room.  Everyone knows it's there but nobody cares.  Because they aren't feeding the freak.  
4. Free Government Funded Preventative Services As Determined By The USPSTF (United States Preventative Services Task Force).   Regional fees determined by an open bidding process.    For example.  If the lowest bid for screening colonoscopies was $100, all colonoscopies in the region could charge $100. If you are not efficient enough to compete at this price point, that's your fault.    Let the market find the price.  If you don't want to participate, you don't have to.  
5. Care is delivered in a Subscription Model.  Also, known as concierge care.  I don't like that word, concierge.  It sounds so hooty flooty.  It is in fact a wonderful way to deliver health care, free of economic incentive to do more.  Some argue that the incentive is to do less.  Of course it is.  When you start with too much, the natural outcome is to do less.  Some argue that doing less will cause harm to the patient.  I disagree.  Doing less, is in fact, a very natural way to care for disease.  Doing less does not mean doing nothing.  There is no perfect answer, only a better answer.  In a subscription model of care delivery,  the patient is cared for  all year long in ways never before seen.  Whether  by phone, Internet, or in the office, the payment model does not limit one to office visits.  Care can be coordinated in many different ways.  The cost of procedures are modeled into the subscription costs.  So doing more does not generate more revenue.  In fact doing less could in fact downshift the standard of care for communities and create less harm with patient interventions.   Imagine that.  Financial incentives driving the standard of care.  When the standard is to do everything, everything is done.  Change the standard and you change the cost of delivering safe and effective care.

The heart of my idea for a systemic subscription model can be organized around many possible arrangements.  Patients can subscribe to independent physicians or physician groups on a yearly basis.  For example a healthy 25 year old could pay $100 a year to a cardiologist that he may not see for 25 years, if ever.  A Healthy 18 year old could pay a pulmonologist $100 a year and may never see them either.  Perhaps pay a general surgeon $75 a year.  Or a Neurosurgeon $50.  As the specialist becomes more scarce, the cost generally drops as their patient panel could absorb a far larger population without an undue increase in work load.  Theoretically, one could go down an entire list of specialists and primary care docs and pay a subscription fee to all of them, independently.  To have their services available, on retainer, on an annual basis, along with all possible necessary procedures to care for them, should they turn sick.

The same could be done for hospital care as well.  In a community of 100,000 folks, a hospital could charge a $3,000 annual subscription fee to insure hospitalization costs for all 100,000 folks.  This would generate $300,000,000 in revenue.  Now, I'm not a hospital administrator, but I believe these kind of numbers could certainly make hospital care highly affordable for all patients.  $3,000 to guarantee access to hospital care for an entire year, should you need it.

Certainly, physicians and hospitals could partner into highly integrated care models that deliver both in patient and outpatient care in both primary care and specialized medical and surgical services.  Higher fees could be commanded by having a higher scope of services available.  And bundling the fee into one large yearly sum could also create economies of scale.  What if someone offered you total care with access to all specialists, should you need it, for $5,000 a year.  As a 25 year old, a 50 year old, a 75 year old, you would have to be a moron not to jump for the opportunity.

Large regional rural/city hospital networks could be established to provide necessary referrals.  The problem is current payment models of fee for service simply do not allow these types of innovative changes to occur.  We just keep throwing more money at an inefficient model of care delivery.  Do more.  Get More.  Pay more.  Until nobody can afford anything.  And then we are all screwed.

One of the great benefits of a subscription model is the WIN-WIN for all parties.  If physicians wish to contract with patients only and remain independent, they can.  If physicians wish to join hospital systems, they can.  The payment models are all negotiable and based on competitive market prices.  If you are a better physician with better bedside manner or bigger flat screens in your office, you can command higher prices.  It's up to the patient to decide how much they want to pay for your services.

If a community offered you full hospital service access, and access to primary care and specialist services for a calendar year, for the grand sum of $6,000, would you take it?  I absolutely would.  I wouldn't even hesitate.

Now, what if they offered to sell you that plan for $5,000 if you were a nonsmoker?  What if they offered to give you a $500 rebate if you quit smoking and lost weight?  What if they reduced the price by $1,000 for joining their healthy lifestyles gym?  What if the hospital offered free smoking cessation classes for you to quit?  What if the primary care doctor did home visits?  Or had group diabetic education.  What if the hospital had a personal financial stake in keeping its yearly subscribers healthy?  What if the hospital made money by keeping beds empty, not full?

Just think.  We could turn hospitals into corn farmers.

The possibilities of a subscription model are pretty exciting.  Hospitals getting paid to keep beds empty, not full.  Doctors getting paid to take care of patients, not having to generate revenue by doing more.  Or  documenting asinine E&M rules.  They generate revenue by competing with other physicians in the market based on price and service.  If you provide better service, you get a higher price.

What a novel idea.  It's amazing what happens when you take make more, do more out of the equation and just take care of patients.  But also retain the ability to charge what you want.  If you offer greater service, you can demand a greater price.  You make more be being better at what you do, not by doing more of what you do.  You exponentially increase your efficiency by eliminating the absurd Evaluation & Management guidelines by which physicians are currently paid from.  The system that accuses them all of criminal fraud until proven innocent.

I often say I could see two or three times as many patients if I was able to just see patients, and not worry about billing every possible encounter at 100% accuracy every time.

As you can tell I am a strong believer in the power of bundled services.  Instead of getting paid to do more, it pays you to do better.  To provide better service, which can command a higher price.  A price that you determine.  A price that the patient pays by choosing you.  Not some insurance companies decision.  In essence, a contract of WIN-WIN.  A system bound with possibilities.  It still allows solo practice, although the economies of scale would decline.  But it also allows physicians and hospitals to join forces to keep patients out of hospitals and decrease costs, which can be shared among all the parties:  hospitals, doctors and patients.

Imagine.  A system of delivering health care where you actually make money for doing less.  Where patients make money for staying out of hospitals and getting healthy.   And hospitals make money by keeping people healthy.  This is the type of proactive thinking that can put the brakes on out of control spending that threatens the already fragile economy we live in.

The winners are patients.  The winners are doctors who practice good medicine and deliver a product that keeps patients happy.  Happy patients are willing to pay more for their  service.  Everyone is a winner, except those who make money off unnecessary health care delivery in the fee for service model.  Hospitals and doctors alike.

Now, who's going to pay for it?   Who is going to cough up the thousands of dollars  for all of America to subscribe to their health care?

We are.  Patients have the option to withhold %5 (7% for family plans) of their pretaxed dollars of earned income to be applied towards their yearly subscription service pot of money.  A subscription pot determined by statisticians based on your geographical location.   For example.  If you make $20,000 a year of earned income.  You will have $1000 withheld ($1,400 for families).  Businesses will be required to match the contribution, dollar for dollar, up to the maximum determined subscription pot.  The rest will be funded by Uncle Sam.  The total sum will be placed into a subscription account, which must be used to fund, at a minimum hospitalization subscriptions.  The rest can be used for physician subscription fees, if you so choose.  However, you forgive your right to the services of any physician if you don't have a subscription.  Why?

Because EMTALA rules will be revoked and any hospital can refuse to care for any patient who has not funded their hospital subscription service.  As a voluntary program you have the right not to participate.  But you give up your right to access of care as well.

If you choose not to fund your subscription plan to the tune of 5% (7% for families) of your income, you forfeit your right to all medical care access and the government's matching contribution as well.

This is not a free ride.  Everyone pays their fair share.  That means even those with the least are expected to contribute 5% of their income to their own health.

If you make $100,000 a year, $5,000 will be withheld pretax to fund your yearly deductible.  Your employer will contribute $3,000, up to the max, (say the max is $8,000) and Uncle Sam is off the hook.  If you make $200,000 a year, you contribute all $8,000 yourself.

I can't think of anything closer to a Utopia health care delivery model than this. A combination of personal responsibility without causing bankruptcy, a contribution by business that won't bankrupt them and a contribution by government that leaves the actual delivery of health care services entirely in the open market to determine price.

No more fighting insurance claims.  No more third parties.  Your patient pays you a fee.  Whether you see them every three months, or you never see them in 25 years, you are practicing medicine based only on your ability to price your fee in competition with others around you and delivery care that your patients want.

Everyone comes out a winner.