Robert Fogel on Health Care

The money is coming from personal spending. If from employer-provided health insurance, its in lieu of salary. If from Medicare/Medicaid its from the taxes we pay. If its from private insurance or from our own money, its from personal spending.

Of course, if its from any kind of insurance, then the health care we receive is not related to the amount of money we pay, except by rare coincidence.

Keep that in mind when people tell you that the real problem in health care is excess cost.

The real problem in health care is inefficiency (which causes high costs). Inefficiency starts with the patient who makes poor choices about whether to seek health care and about what kind of care to seek. (Avoiding health care when it's necessary is very inefficient, since a minor problem can become a serious one.) Inefficiency continues when the clinician fails to ask the right questions, fails to do a thorough exam, or fails to properly add 1 + 2 + 3 and generates an incorrect diagnosis. This leads to wrong treatment, worsening of the condition (possibly complicated by drug side effects), repeated visits to the clinician, many tests, referrals to specialists, etc. Arnold Kling recently gave anecdotes about bad (and inefficient) hospital care of his father. I will say that these types of problems are common. Other inefficiencies relate to billing, government regulations, and general bureaucratic bungling. I estimate that at least two-thirds of health care spending is due to inefficiencies. But, please, don't take this as an endorsement of so called Complementary and Alternative Medicine (otherwise known as quackery and snake oil), because, in that market sector, 99% of spending is inefficient.

Eliminating health care inefficiencies would require educated adults with decent lay knowledge of health issues; well-trained, intelligent, and ethical clinicians who have adequate time for each patient; efficient billing systems; and thoroughly efficient management of hospitals, nursing homes, hospices, rehab centers, group practices, pharmacies etc. These don't exist in the real world, so I see no way to eliminate the problem. I've been a physician for 25 years, and health care inefficiencies have steadily worsened over that period. Nothing I see on the horizon will reverse the trend.

Dr.T., why inefficiencies have worsened?

I'd expect that things are going better ...

...or Anthem and Humana would be in the newspaper every week in columns bemoaning their excessive profits. Right next to the columns about ExxonMobil.

Kurbia: I believe there are four main reasons why inefficiencies have worsened in medical care.

Reason 1: Much bigger menu of more expensive testing tools (CT, MRI, and PET scans, doppler ultrasound scans, genetic tests, hormone tests, autoimmune tests, etc.) for clinicians to misuse.

Reason 2: Poorer quality clinicians. Students admitted to medical schools since the mid-1980s (when fear of AIDS decreased the number of applicants) have much lower average grades and average MCAT scores than previous enrollees. Also, colleges have watered down their curricula so that pre-med students are less prepared now. Similar changes occurred among physician assistant and nurse practitioner programs.

Reason 3: Information overload. The one bad thing about electronic health records is that everyone thinks that it is OK to toss in thousands of words of worthless or replicate information. A common example: all of today's lab results on a hospital patient get copied into the intern's progress note. The volume of information clinicians must parse through has to be seen to be believed.

Reason 4: Time pressures are greater now than in the past. Office expenses are very high and have risen much faster than reimbursements (most of which are tied to Medicare fee schedules). Debt-ridden physicians feel compelled to squeeze in more patient visits per hour. This leads directly to the incorrect (or just delayed) diagnosis problems I described yesterday.