How Economic Incentives have Created our Dysfunctional US Medical Market

[Note:  This item comes from friend David Rosenthal.  DLH]

How Economic Incentives have Created our Dysfunctional US Medical Market
Real life examples from patients (and readers!) that inspired my list of 10 Economic Rules
By Elisabeth Rosenthal
Apr 26 2017
https://medium.com/@RosenthalHealth/how-economic-incentives-have-created-our-dysfunctional-us-medical-market-b681c51d6436

In my new book “An American Sickness: How Healthcare Became Big Business and How You Can Take it Back,” I began with a list of 10 Economic Rules that seem to govern the Dysfunctional U.S. Medical Market. Some readers reacted with disbelief: How could such seemingly callous and absurd-sounding principles form the underpinning of something as precious as our healthcare? So here, I’ve illustrated each of the 10 rules with some real-life examples from the book to show you how they do, indeed, come into play. What you’ll see is that the economic forces and incentives that motivate our health system often lead to medical practices that are not especially good for our health — or our wallets.

What you’ll see is that the economic forces and incentives that motivate our health system often lead to medical practices that are not especially good for our health — or our wallets.

• More treatment is always better. Default to the most expensive option.The most expensive treatment for the most common benign type of skin cancer is a complex technique called Mohs surgery, in which skin is sliced off sequentially and analyzed after each cut. It is frequently followed by plastic surgery with resulting total charges often in the tens of thousands. Mohs can be highly useful in delicate areas like an eyelid, but it is now far more widely deployed. In most body locations such basal cell carcinomas can be cured with a host of cheap and quick treatments: burning, cautery, simple excision or applying a caustic cream. Nonetheless, the rate of using the expensive techniques rose 700 percent among Medicare beneficiaries between 1992 and 2009. The decision to use MOHs often likely reflects “the economic advantage to the provider rather than a substantial clinical advantage for the patient,” one prominent dermatologist told me.(Patients: If a doctor recommends Mohs, ask instead about the cheaper treatments!)
• A lifetime of treatment is preferable to a cure. Medically this sounds crazy. But financially this is a no-brainer: Type 1 Diabetes is a lifelong serious disease — as well as the basis of an industry worth billions, providing pumps, monitors and ever-more-expensive versions of insulin. Pharma has little incentive to finance research for cures to a disease that has created such a lucrative market. The book outlines the travails of Harvard Professor Dr. Denise Faustman, whose lab is researching a cure using a generic drug. Pharma declined to fund her work. “They said, ‘It’s really interesting but we’ve got a problem: Tell us how it will ever make us money?’” From the manufacturers’ standpoint, if diabetes could be cured there was no need for insulin, pumps, and monitors — all extremely lucrative products.
• Amenities and marketing matter more than good care. In Europe most hospitals look like junior high schools; in the U.S., hospital lobbies resemble 5-star hotels. Henry Ford West Bloomfield Hospital hired a hotel industry executive to upgrade its services and the “guest experience,” turning a once financially failing hospital around. That’s what brings in patient business. But none of that luxury correlates very well with the quality of care. When Paul Levy, formerly CEO of a major Boston hospital, told his board that he wanted to study infection rates, it balked. Why would a hospital want to uncover that? How much do you know about your hospital’s infection rates after surgery? Its 5-year survival rates after cancer treatment? The cost of a day in the ICU? Whether the ER doctors are in your insurance network? (Note to patients: Forget the art and free coffee, this is where we should focus attention.)

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