Consumerism and Value Creation in American Healthcare

Consumerism and Value Creation in American Healthcare

Consumerism and Value Creation in American Healthcare Why educated consumers – and only educated consumers - can reduce costs, improve outcomes and fix our broken healthcare system Gary Fradin 2015 1 2 All materials in this book are copyrighted © by Gary Fradin, 2015. All rights reserved. No part of this text may be reproduced without the express written consent of Gary Fradin 3 4 The Author Gary Fradin teaches healthcare economics to hundreds of health insurance brokers annually. He has written 6 books about healthcare: Moral Hazard in American Healthcare Healthcare Problems and Solutions Understanding Health Insurance Transparency Metrics Uninformed: The Plight of America’s Patients How to Talk to Your Doctor He also developed TheMedicalGuide, an online consumer education company, to teach patients how to make wiser medical care decisions. Many of the tools discussed in this text are available at www.TheMedicalGuide.net. Gary holds Master’s Degrees from University College London and Harvard. 5 6 Healthcare value defined Value is a relationship between dollars spent and outcomes. Spending less for better outcomes creates value. Spending more for poorer outcomes destroys value. We can measure individual test or treatment value by considering specific costs and outcomes. If one treatment costs $50,000 and another $8,000, but both generate the same patient outcomes, we call the $8,000 treatment ‘better value’. We can measure healthcare system value by considering total expenditures and population health metrics like longevity, disease morbidity and infant mortality. If Americans spend $10,000 per person annually on medical care and live an average of 79 years, while another country spends $4,000 per person but lives an average of 81 years, we say they have ‘better healthcare system value’. We can increase value by: Getting better outcomes for the same number of dollars, or Getting similar outcomes for fewer dollars, or both We can decrease value: Getting similar outcomes for more dollars, or Getting poorer outcomes for the same number of dollars, or both Our task in this book: determine which activities increase or decrease healthcare system value. 7 8 Table of Contents Preface ………………………………………………………… Page 11 Introduction………………………………………………………. Page 13 Part 1: Value Destroying Activities ………………………... Page 23 Employer Based Health Insurance …………………..……… Page 25 Review Questions …………………………………….. Page 59 Some Government Incentives and Tax Benefits ………….. Page 63 Review Questions…………………………………….. Page 99 Current Levels of Consumer Education and Knowledge…. Page 103 Review Questions ……………………………………. Page 135 Part 2: Value Neutral Activities (neither obviously create nor destroy value but can do either depending on how they’re implemented) ……………….. Page 139 The Affordable Care Act ……………………………………... Page 141 Review Questions ……………………………………. Page 179 Price Transparency ………………………………………….. Page 183 Review Questions ……………………………………. Page 211 Part 3: Value Creating Activities ………………………… Page 215 Decision Aids and Consumer Education …………………….. Page 217 Key Questions for Patients to Ask by Topic………….. Page 242 List of Key Questions …………………………………… Page 312 Review Questions ……………………………………… Page 231 Integrating Consumer Education into Broker Services…….. Page 317 Review Questions ……………………………………… Page 331 9 10 Preface I wrote this book as a text version of various lectures I gave to health insurance brokers between 2012 and 2014. I originally titled it ‘Health Insurance Topics’ as the lectures were each self contained analyses of a particular issue with no intended overall theme. But such a theme appeared as I wrote: value creation. Value means ‘outcomes per dollar spent’. 1 We can create value by getting better outcomes at lower costs and we can destroy value by getting poorer outcomes at higher costs, plus a few variations on those definitions. The book’s various sections fell into place within that framework: Activities that create value Activities that are value-neutral, neither obviously value creating or destroying value but possibly either depending on how they’re implemented Activities that destroy value I decided to keep the original lecture format so each chapter focuses on a single, independent issue. That means there’s information overlap since, for example, discussions of both price transparency and systemic waste require an understanding of treatment variation. I sometimes used similar examples / case studies in different chapters to illuminate different points. I hope the overlap reinforces key ideas and doesn’t simply bore readers. I take the issues discussed here personally and seriously. As a child of the 1960s who, among other things, tried to create value in Chad, Africa by building primary schools and planting orchards - the latter in a leaper colony outside N’Djamena - I have a great passion for activities that improve people’s lots in life. I have an equal passion for opposing value destructive activities, with unnecessary medical care being a prime example. Three personal notes. First, while writing this book I developed adhesive capsulitis, commonly known as early stage frozen shoulder, a painful condition that’s not indicative of any major systemic health problems. With modest exercise and appropriate rest, the inflammation-based pain should subside over time. Corticosteroid steroid injections 1 This definition comes from Michael Porter, What is value in healthcare? New England Journal of Medicine, Dec 23, 2010 11 apparently sometime speed this process. Will such injections work for me? I can’t figure that out. Specifically, I can’t find the Number Needed to Treat to determine the likelihood of my benefitting from these injections, nor the Number Needed to Harm to determine the risks. I can’t find recommendations on ChoosingWisely™ or from the US Preventive Services Task Force. In fact, I can’t find any high quality, disinterested, methodologically valid outcome studies on the topic. I can, however, find tons of information provided by interested parties like orthopedic surgeons and hospitals suggesting how their services – for which I would pay - can help me. Should I use those, and only those, information sources as the basis of my medical decision making? The obvious risk of information bias makes me uncomfortable. This lack-of-objective-information situation occurs for virtually every patient and virtually every medical condition in our healthcare system. That’s why I’m so enthusiastic about the budding consumer Decision Aid development movement. I hope that enthusiasm comes through in this text. Second, my writing style varies between academic and conversational reflecting the original lecture basis of these chapters. I tried to make the material come alive by injecting occasional opinions and observations. I hope this enhances the reader’s experience and is not, as my kids sometimes suggest, ‘dumb, Dad’. Third, I value reader feedback. If any of the ideas in this text stimulate your thinking, please let me know. I’m readily available at [email protected]. I promise to respond if you write to me! I hope you find reading this book a worthwhile experience. Gary Fradin March, 2015 12 Introduction Our healthcare system falls somewhere between a ‘mess’ 2 and ‘insane’ 3 costing $10,000 per person per year but putting us about 40th internationally in life expectancy and infant mortality. That the system works badly is clear. Why it works so poorly and what we can do to fix it remain hotly debated topics, with the same basic positions restated consistently for almost a century.4 Some say we have too much government influence thus destroying the market’s ability to deliver high quality services at reasonable costs. Others argue that we have insufficient government influence, allowing private companies and healthcare providers arbitrarily to provide too much or too little care thus raising costs without improving outcomes. Hundreds, even thousands of commentators wax poetic about the problems (OK, generally not so poetically) and their own favored solution. As I’ve read dozens of books and hundreds of articles, I’ve been impressed with a similarity among proposed solutions: ‘If only we can get the payment and regulatory incentives right,’ they seem to say, ‘the system will work.’ Virtually everyone in the healthcare commentary business focuses on the supply of medical services - how we distribute medical care in this country - and proposes a fix that fits his or her own orientation. I disagree. If we could have gotten the incentives right, we would have gotten the incentives right - or at least close to right - given that we’ve worked on this for decades with ineffective reforms regularly emanating from both the federal and state governments and carrier plans increasing in complexity, in theory at least, to improve outcomes and reduce costs. I don’t think we can create tremendous value by focusing on the supply side of healthcare. 2 See Richmond and Fein, The Healthcare Mess, 2005. Both gentlemen were Harvard Medical School professors, with Richmond the US Surgeon General under President Carter. 3 Regina Herzlinger of Harvard Business School, speaking at the Massachusetts Association of Health Plans convention in Boston, December 2014. My notes are unclear if she said ‘crazy’ or ‘insane’. Apologies for any error here. 4 See Thomas Miller’s article ‘Health Reform: Only a Cease Fire in a Political Hundred Year’s War, Health Affairs June 2010 for the gory details 13 Instead, I think the demand side

View Full Text

Details

  • File Type
    pdf
  • Upload Time
    -
  • Content Languages
    English
  • Upload User
    Anonymous/Not logged-in
  • File Pages
    335 Page
  • File Size
    -

Download

Channel Download Status
Express Download Enable

Copyright

We respect the copyrights and intellectual property rights of all users. All uploaded documents are either original works of the uploader or authorized works of the rightful owners.

  • Not to be reproduced or distributed without explicit permission.
  • Not used for commercial purposes outside of approved use cases.
  • Not used to infringe on the rights of the original creators.
  • If you believe any content infringes your copyright, please contact us immediately.

Support

For help with questions, suggestions, or problems, please contact us