Healthcare Managing Change

Healthcare Managing Change				played a role in the ER crisis this February. To
I consider the question of the managing change				make matters worse, bureaucrats have
with the healthcare issues in a way of curtain				developed elaborate spending controls, reducing
problems and they're solutions. First of all, let's see				the system's ability to react. Canadians have
some current issues in the USA health care				assumed that if we make health care "free" (and
system today. New diagnostic and treatment				pay the consequent high taxes), no one will ever
procedures flourish in the United States. Our				need to worry about getting quality care when
medical schools are of the best, our physicians of				they need it. It seems that this assumption is
the first rank. And why not, since we spend				false. Making health care "free" means everyone
some 15 percent of our GDP on health care? Few				must worry about getting quality care. And yet
would argue that there's a better place to get				the so-called experts continue to try to make
sick than in the United States if you can				Medicare work-against the odds, against human
penetrate the system. Our system is the				nature. This dooms us to longer waiting lists and
problem, and it's only going to get worse. At				more horror stories.
dinner party, if you listen to people on the				Isn't it time we had a meaningful public discussion
subway, if you talk with physicians, and if you talk				about health care? Lives are at stake.
with leaders of small business and big business,				Most Americans are insured through their jobs.
they're all very unhappy and confused. Private				Employers used to buy the insurance from a third
insurance companies are happy about current				party, typically the local Blue Cross/Blue Shield
trends, if not happy about where we are. In the				not-for-profit plan. Recently the Blues have lost
present, they're making money. Drug companies				ground to more aggressive for-profit insurers. But
were happier six months ago. They think they've				their strongest competitor is now employers
been taken aback by the bad press that they've				themselves, stung by rising health-care costs and
been getting, and they're searching for how they				the state authorities' burdensome regulation of
can do better. But by and large, until relatively				the insurance industry. Federal law allows
recently, I think they were feeling again				employers who "self-insure" (usually through an
comfortable. The more-affluent people that are				arm's-length intermediary) to escape state
also fully insured. While they grouse about the				regulation. Over half of America's biggest
paperwork, they have reasonable ways of				employers have now made the switch, in effect
accessing the tremendous advances that have				paying their workers' medical bills themselves. The
taken place in the biomedical sciences, which are				other main insurer in America is the government.
increasingly translated into better diagnostic care,				The old and the disabled are covered by a federal
therapy, drugs. I use the word "access" advisedly,				programme, Medicare. Medicare, which will spend
because it isn't always easy for them either to				about $110 billion this year roughly twice the cost
get to the right places because of the				of Britain's NHS , is divided into two parts: the first
bureaucratic constraints, because of the				pays for most hospital care out of payroll taxes;
third-party payers who say you've got to have				the second pays for doctors' fees out of general
your primary-care physician refer you before you				taxation and a premium paid by the patient.
can see a specialist. But when they do gain access				Medicaid, a state-federal programme that will cost
to the system, this group feels reasonably				nearly $90 billion this year, pays all the medical bills
satisfied.				of the poor, including those for long-term care.
National medical errors database hits one million				Retired and serving soldiers are covered by the
records milestone. Medmarkx, nongovernmental				Veterans' Administration, which has a network of
database of medication errors, has received over				inefficient hospitals, and by a special programme
one million medication error records to date, the				with the colourful acronym champus. This
U.S. Pharmacopoeia (USP) announced recently.				patchwork quilt (see chart 4 on next page) has
Medmarx is an anonymous, Internet-based				two gaping holes. One is that it leaves a large and
program used by hospitals and other healthcare				growing number of people currently around 35m
organizations to report track and analyze				without any insurance at all. The plight of the
medication errors. Since the program began in				uninsured is bad, but not as bad as it sounds:
1998, more than 900 HCOs have contributed data				most get care from hospitals that are, in theory,
to use an historical review of Medmarx data				not allowed to turn anyone away. Figures from
reveals that approximately 46 percent of the				the census bureau and the American Hospital
medication errors reported reached the patient;				Association suggest that overall spending on the
98 percent of the reported errors did not result in				uninsured is comparable to spending on the
harm. JCAHO Creates IT Panel. The Joint				insured, though it is unevenly distributed. Uninsured
Commission on Accreditation of Healthcare				people can be bankrupted by big medical bills. And
Organizations has created an advisory panel to				the bills they cannot or will not pay are a
recommend ways the Oakbrook Terrace,				time-bomb passed among others involved in the
Ill.-based organization can use its accreditation				system. The hospitals try to pass it to the insured
process to increase the role of IT in healthcare.				in higher premiums; insurers try to pass it back in
The panel will conduct a benchmark survey on				lower hospital profits, or to offload it on to state
the existing state of IT adoption in healthcare,				and local governments. The other flaw in the
and track progress annually. The 39-member				American way is caused by costs that are
panel, chaired by William Jessee, M.D., president				spinning out of control. At over $600 billion, the
and CEO of MGMA, includes provider				cost of health care in America now absorbs 12%
representatives and reps from health insurers,				of GDP. And whereas in other countries it has
academia, think tanks, IT vendors and				roughly stabilised, in America the share has been
government agencies.				rising throughout the 1980s. Employers have
The Council of Smaller Enterprises is putting its				reacted by trimming the health benefits they
considerable weight behind a push by the National				offer, especially undertakings to cover staff who
Small Business Association for health care reform				have retired. Those undertakings will knock a
on a national level. The National Small Business				$200 billion hole in profits when they have to be
Association, of which COSE is a member, has				shown in company accounts from next year. One
developed three ideas it plans to take to the				result is that in four-fifths of labour disputes in the
federal government as ways to reform the ailing				past two years, the main fight has been over
health care system, said William Lindsay III,				health benefits.
immediate past chairman of the association, during				Foreigners like to blame the tribulations of
a recent visit to Cleveland. Those ideas are fair				American health care on excessive reliance on the
sharing of costs, empowering and focusing on the				free market. In fact, government policy has
individual, and reducing costs while improving				played a big part. Instead of improving equity,
quality. "The fundamental problem in America is				well-intentioned state regulation of the insurance
the cost of health care and the cost of				market has made insurance all but impossible for
insurance," he said. "We've got to get everybody				small employers to buy. Two-thirds of the
insured." The Washington, D.C.-based association				uninsured work, many for employers who would
already has begun to lobby lawmakers to adopt				like to offer insurance if they could find it. The
the three basic principles, and they've been				other third ought to have Medicaid cover, but
receptive so far, Mr. Lindsay said. For its part,				budget cuts and a diversion of cash into long-term
COSE soon will lobby Ohio lawmakers on the				care for poor, old people mean that the
same issues, said COSE president Jeanne Coughlin.				programme now covers only 40% of those
Under the association's proposal, all Americans				below the federal poverty line. As for costs of
would be required to obtain basic health care				treatment, the biggest source of inflation has
coverage, a package that would be designed and				been reliance on expensive fee for-service
mandated by the federal government, Mr. Lindsay				medicine that gives doctors and hospitals an
said. The basic package would cost the same for				incentive to treat people in the most expensive
anyone in a given market, regardless of their				possible ways. This might look like a market fault.
health condition, he said. For that proposal to				But another prime contributor is the government's
work, insurance companies would need to accept				decision to exempt employer-paid insurance
everyone into one insurance pool, which would				premiums from federal and state income taxes
spread costs broadly and reduce uncompensated				amounting to an annual subsidy of nearly $60
care, Mr. Lindsay said. If companies provide health				billion. It is bad enough that this subsidy is biased
care coverage above the basic federal level, they				to the better-off; worse, it destroys any
would need to pay taxes on the money spent on				incentive for employees to choose cheaper
those benefits, he said. Those additional tax dollars				insurance. The government is also partly to blame
then would be set aside for health insurance				for a legal system that has produced astronomical
subsidies for people who don't qualify for Medicaid				awards to patients in malpractice suits. These
but can't afford their own insurance.				feed straight into the costs of health care through
It is ironic that Mrs. Jeannie Lacombe received so				malpractice insurance taken out by doctors. High
much attention after her death; she didn't receive				premiums and the fear of being sued have also
much of it immediately beforehand. On the				made some types of care hard to get (try finding
morning of February 1, the Montrealer suffered				an obstetrician in Florida to deliver a baby). Even
chest pains and went to the nearest hospital				more expensively, they encourage doctors to
emergency room. Four hours later, a physician				practise defensive medicine such as ordering
finally looked at the 66-year-old woman, who lay				unnecessary tests.
on a stretcher in the hallway. She was dead. On				Not everything about American health care is bad.
that early February morning,				Its quality is widely thought to be high which is
Maisonneuve-Rosemont Hospital was crowded				why one opinion poll had 90% of respondents
with 63 patients in a ward designed for 34. Only				favouring "major changes" in the system, but
three of Montreal's 24 emergency rooms were				over half satisfied with their own care. There is
not overflowing with double or triple their capacity.				plenty of choice of doctors and hospitals:
The problem isn't confined to Montreal. Two				European indifference to patients is rare in
weeks later, in Toronto, a five-year-old boy died				America. America has made the biggest progress
in an ER five hours after arriving, without having				in developing quality assessment and output
seen a physician. At times this February, Toronto				measures for health. It remains the world leader
nurses have fought with ambulance attendants				in innovation, experiment and new technology,
over the stretchers patients were brought in on.				both in medical care and in different ways of
A Toronto Ambulance official commented last				delivering and paying for it.
week that the hospitals have been refusing				In 1915 a labour pressure group looked forward
ambulance patients more often, and for longer				to national health insurance as the "next great
periods, than at any time in the last 27 years. In				step in social legislation". Truman tried and failed to
Winnipeg, hospitals have been routinely on				introduce it in 1948. In the mid-1960s Johnson
"redirect," meaning that they accept only critical				managed to push through Medicare and Medicaid.
patients, and "critical care bypass," meaning they				Richard Nixon encouraged the spread of HMOS (in
are too crowded even for those. In Calgary, a				which patients pay a fixed fee to cover all their
physician arrived for work at Rocky View Hospital				health care) and managed care. But when he
one day to find emergency patients lined up in the				suggested a national health programme based on
parking lot. The ER and the foyer were already				a mandate for employers to provide health
filled. "I have never seen anything like that in all				insurance for their workers, it died partly because
the years I have been practising," he says.				Democrats like Edward Kennedy wanted
Calgary's regional health authority openly				government insurance instead. Ironically Senator
contemplated cancelling all elective surgeries, and				Kennedy now supports something like the Nixon
near month's end, health officials in Edmonton did				plan, but it is opposed by George Bush. There is a
so. Somehow, in the "best healthcare system in				host of other ideas on offer: Insurance reform.
the world," patients are waiting hours to be				Some want to ban "experience rating" (skimming
examined. The sickest lie on stretchers for days,				the cream of insurance risks) and insist on
awaiting admission. Some argue that a				community rating. Others want to encourage the
combination of winter storms and flu have placed				small-employer insurance market, perhaps by
an unusually great strain on the system. These				pooling risks. A third idea is an "all-payer" system
two factors surely contributed, but how did				such as Maryland's, under which all insurers agree
Medicare erode to the point where minor stresses				to pay the same price to hospitals an attempt to
can wreak such havoc? And is ER overcrowding				create the monophony power among purchasers
such an isolated phenomenon? Last year at this				that is common in most other countries. But the
time, with neither flu nor ice storm, Montreal's				insurance market already suffers from too much
emergency wards were filled to 155% capacity.				regulation. And an all-payer system could stop the
And the problems with Canada's emergency				move towards cheaper selective contracts with
rooms are only the tip of the iceberg. In truth,				providers. Medicaid expansion to cover more of
Medicare has been languishing for years. Consider				the uninsured. This might include letting people
the plight of Jim Cullen of Winnipeg. Mr. Cullen has				above the poverty line, but who cannot otherwise
a potentially life-threatening abdominal aneurysm.				find insurance, buy into the public programme. An
He could bleed to death without warning unless				alternative is to expand Medicare to cover the
the aneurysm is surgically repaired. Mr. Cullen has				whole population. But in deficit-ridden, taxophobic
waited five long months for that surgery. Despite				America, neither the federal nor any state
his optimism, he wonders every day: "How long				government is in a position to take on a new
will that (artery) wall hold out?" But because of				spending commitment that could add up to $250
the ER crisis, Mr. Cullen's surgery is on hold				billion a year (even if it saves more in private
indefinitely. Once Canada's pride and joy, Medicare				spending). State governors have repeatedly asked
is marked by long waiting lists for life-saving				Congress to stop expanding the coverage of
surgeries, inaccessible diagnostic equipment,				Medicaid. Price and volume controls. The most
dwindling standards of hospital care, and an				successful of these has been Medicare's
exodus of good physicians. Meanwhile, Canada's				prospective budgeting for hospitals, where
population is aging. Over the next 40 years, the				payments are based not on the costs incurred
percentage of senior citizens will double. More				but on fixed prices per case (known in the jargon
seniors require more services; if we can't meet				as diagnosis-related groups, or DRGS). This has
today's demand, how will we meet tomorrow's?				been copied by many private insurers. The
To improve Medicare, Canadians must first				average patient now stays in hospital for a
answer one question: what ails the system?				shorter period in America than in any other
Some-opposition politicians, professional				country, and a recent Rand Corporation study
associations, and public-sector unions-argue that				confirmed that the quality of patient care has not
the system is simply under funded. Others-cabinet				been affected. A new set of Medicare price and
ministers, economists, and policy experts-maintain				volume controls on doctors comes into force
that the system has enough money: we just				next year. But though such controls might hold
have to spend it better through greater				down spending in one place, bills have a nasty
government control. If Medicare is under funded,				habit of popping up somewhere else as providers
people should pay more into the system. But				fight to maintain incomes. Alain Enthoven of
according to a study by the Fraser Institute,				Stanford University has put forward the most
working Canadians already spend 21 cents of				sophisticated single reform plan. TO encourage
every dollar they earn paying for Medicare. How				managed care (of which more below) he would
much more do we need to spend? How much				cap the tax exemption for health insurance at the
higher must taxes rise? The aging of the baby				cheapest insurance policy available. He would
boomers will almost certainly bankrupt us: the				create state insurance pools under healthcare
Canadian Actuarial Society estimates that taxes				"sponsors" for those who cannot get coverage.
will need to rise to an average of 94% of income				Employers who did not give their workers
in the next 40 years to sustain the system.				insurance would have to contribute to a state
If greater control is needed, governments must				pool an idea known as "play-or-pay". Congress's
take a larger role in the healthcare system. This				Pepper commission, which reported in 1990, also
has been the trend over the past two decades,				wanted a play-or-pay plan. But such employer
but has any government ever managed to				mandates would increase business costs, and
browbeat part of the economy into efficiency?				without firm cost controls they might lead to
Governments are increasingly involved in hospital				more overall spend on health care. Individual
decision-making, but if Moscow central planning				mandates. The Heritage Foundation, a right-wing
didn't work in Moscow, what makes us think it will				think-tank based in Washington, DC, is touting a
work in Victoria, Edmonton or Toronto? When				plan that would replace the employee-tax
healthcare is "free," people do not hesitate to use				exemption by a tax credit to help people buy
the system. They request too many tests. They				their own health insurance. The government would
stay in hospitals too long. They consult too many				require everyone to take out "catastrophic" health
physicians. The costs add up. Millions of Canadians				insurance a long-stop protection against the
suffer from problems such as insomnia, back pain,				biggest medical bills. Potting the burden on
chronic fatigue, severe headaches, and arthritis:				individuals sounds attractive, but it would make it
there is a great potential for them to spend vast				harder to avoid adverse selection by both insurer
resources to little proven benefit. In 1977, a joint				and insured. As a variant, a government
Ontario government-medical association				commission headed by Deborah Steelman has
committee reviewed patients' use of the system				been considering replacing both Medicare and
and concluded that "demand for medical care				Medicaid with catastrophic coverage for all. More
appears infinite." Canadians assume that in a "free"				patient charges or what are known in the jargon
system there are no tough decisions to be made.				as "co-payments". But these are already high, in
If the doctor suggests that you need an X-ray,				both the private and the public sectors (on some
you get one. But while you don't need to think				estimates, old people now pay as much out of
about the cost of the X-ray, the folks at the				their own pockets for health care as they did
Ministry of Health do. You don't worry about the				before Medicare). And if they are pushed too far,
cost of visiting walk-in clinics, or lengthy hospital				people simply take out extra private insurance.
stays, but these costs still add up. According to				Managed care in HMOS or PPOS
the Ontario Task Force on the Use and Provision				(preferred-provider organisations that offer more
of Medical Services, Ontario physicians billed $200				choice of doctor and hospital than most HMOS).
million in 1990 alone for "treating" the common				This still looks the most promising option. About
cold.				70m Americans now belong to a managed-care
In Canada, the provinces have achieved cost				plan. Some plans do little more than insist on
control by restricting access to health services.				second opinions before surgery. But the best of
They have downsized medical schools, restricted				them offer patients all the care they need for an
access to specialists, and reduced the availability				annual prepayment, reversing fee-for-service
of diagnostic equipment. In many ways, Canada				medicine's incentive to excessive treatment.
has opted for the old Soviet method of				HMOS have been touted as the answer for
rationing-everything is free, and nothing is readily				American health care since Paul Ellwood, a health
available. And so Canadians must line up for tests.				economist, coined the phrase in 1972. But after a
For surgery. For the basic healthcare they need.				one-off cut in costs, their spending growth has
Provinces have been busily "reforming" health				since matched the inflation of the fee for-service
care, but what are the long-term results? Patients				sector. Many HMOS have lost money; some have
are discharged earlier from hospitals, often too				gone bust. No wonder Bob Evans of the
early. Patients wait for treatment; some develop				University of British Columbia says that "HMOS
complications. Hospital beds are closed, reducing				are the future; always have been and always will
doctors' ability to admit patients. All these factors				be.

Integrail

Healthcare Managing Change