This article, Five Worrisome Trends in Healthcare, appearing on Medpage Today, is worth reading.
The writer is Joyce Frieden, quoting Chester Burrell,
outgoing CEO of the CareFirst BlueCross BlueShield health plan, at
the annual meeting of the National Hispanic Medical Association at National Harbor, MD.
Some of the trends were not surprising to me. One of them was.
Briefly summarized; the five trends are:
1. The effects of the recently passed tax bill. "If the full effect of this tax cut is experienced, then the federal
debt will go above 100% of GDP [gross domestic product] and will become
the highest it's been since World War II," said Burrell. ....This will stimulate
higher interest rates, and higher interest rates will crowd out funding
in the federal government for initiatives that are needed," including
those in healthcare.
Burrell noted that 74 million people are currently covered by
Medicaid, 60 million by Medicare, and 10 million by the Children's
Health Insurance Program (CHIP), while another 10 million people are
getting federally subsidized health insurance through the Affordable
Care Act's (ACA's) insurance exchanges. "What happens when interest's
demand on federal revenue starts to crowd out future investment in these
government programs that provide healthcare for tens of millions of
Americans?"
2. The increasing obesity problem. This one we've all heard about ad nauseam and I'm going to leave discussing it for another time.
3. The "congealing" of the U.S. healthcare system.
This is the one that was a bit of a surprise to me.
"This is occurring in two ways," Burrell said. First, "you'll see large
integrated delivery systems [being] built around academic medical
centers -- very good quality care [but] 50%-100% more expensive than
the community average.....What these big systems are doing is consolidating community hospitals
and independent physician groups, and creating oligopolies....Another way the system is "congealing" is the emergence of specialty
practices that are backed by private equity companies," said Burrell.
"The largest urology group in our area was bought by a private equity
firm. How do they make money? They increase fees........there is a profound issue on costs."
4. The undermining of the private healthcare market.
"Just recently, we have gotten rid of the individual mandate, and the
[cost-sharing reduction] subsidies that were [expected to be] in the
omnibus bill ... were taken out of the bill,"
5. The lackluster performance of new payment models.
"Despite the innovation fostering under [Center for Medicare &
Medicaid Innovation] programs -- the whole idea was to create a series
of initiatives that might show the wave of the future -- ACOs
[accountable care organizations] and the like don't show the promise
intended for them, and there is no new model one could say is
demonstrably more successful," he said."
In conclusion, Burrell said, "As carbon dioxide is to global warming, cost is to healthcare. We deal
with it every day ... We face a future where cutbacks in funding could
dramatically affect accessibility of care."
I had not thought of that analogy. But it ties into the trend I found most worrying, which is trend #3, the "congealing" of our healthcare system. It seems to be the monetizing of healthcare, the making it into a "cash cow". Burrell used the term, "oligopolies". Unless that is addressed, there is little hope of reining in healthcare costs.
The comments at the end of the article were pretty predictable. We're just not letting the market be free enough. I expected to hear a chorus of "Born Free". And of course too much healthcare is going to the undeserving.
ReplyDeleteNot surprisingly, it seems to be sort of an insurer-centric view of things. I'd expect that the oligopolizing health care delivery systems would reply that they need the increased size and span to counter the market power of the large insurers.
ReplyDeleteThe trend toward oligopoly (consolidations, mergers and weaker providers going out of business, with the result that a handful of large producers control the market) is pretty much a universal economic law - it happens in all industries, all sectors of the economy, unless government acts to prevent it - that is one of the chief function of anti-trust laws. To the extent that consolidation preserves hospitals and other health care delivery presence in poor neighborhoods, it is not all bad.
Jim, yeah, this article was skewed to the insurance side.
DeleteAbout oligopoly of healthcare, an example is the assisted living/nursing care facility where my mother-in-law spent the last four years of her life. It was owned by a large chain which had a lot of facilities in our area. The one in our town was pretty large and had a poor reputation. The one she was in was in a small town about 20 miles from here. The staff were kind and caring and we had no complaints about that. But like most care facilities, it was horrendously expensive. She and I often commented that the money surely wasn't for the real estate, since it resembled the construction of a mid-tier motel. And it wasn't for paying the help, whom we knew didn't get paid that well, and they were spread pretty thin. But the money was going somewhere. The chain was bought and sold at least three times that I know of. Then last week we read in the paper that it was in receivership, and the state had to step in and temporarily assume management to insure that the residents would have no gaps in care.
You are right that consolidation isn't always bad, in that this smaller town facility might not have continued if it were not owned by the parent corporation. However now the parent corporation(s) problems become apparent. All the money that could be juiced out of the situation has been, and the state is holding the bag, at least temporarily.
So do we need to re-examine the need for, and the enforcement of anti-trust laws? I think so.
Katherine - in your personal example, you don't state whether the organization(s) that owned your mom's nursing home are for-profit, but based on your description, it sounds like they are. I'm somewhat skeptical of the for-profit model for hospitals and nursing homes, not least because there is is little or no profit to be made in serving the poor. A mission-centered, not-for-profit model is a better ideal for institutional health care delivery, in my opinion.
DeleteWe may live in a bubble here in suburbia, but the primary care physicians we use in my family - pediatricians, general practicioners and obstetrician/gynecologists - all belong to relatively small partnerships (fewer than 10 physicians in each group). They are for-profit, and I don't begrudge them that. But I see a significant difference between that small-business model of health care delivery and the large corporations that tend to own and run hospitals and nursing homes. My wife and I are able to have personal relationships with the managing partners of those physician groups, and the managing partners are active physicians in their own right - they're working alongside their partners to help the patients. I fear that this small-partnership model is going the way of the prairie chicken.
In my previous comment, I described the small physician groups that serve my family as "for-profit". That's probably a bit sloppy on my part; that term generally is used to classify a type of corporation. Whether these small practice groups are actually incorporated, I'm not entirely sure, but they look and feel like partnerships.
DeleteIt seems that the collection of programs and subsidies known collectively as "Obamacare" was fairly effective in getting previously-uninsured patients enrolled in insurance (many of them in Medicaid). But it has not been effective in bending the cost curve.
ReplyDeleteKatherine's anecdote in the comments about large, corporate-owned health care facilities, and my reply regarding smaller health care service organizations like small physician partnerships, both point to questions of consistent quality in health care delivery. A well-managed corporation, even a large one, can be beneficial if it can establish and maintain consistent quality; it is thought that this is one of the benefits of the "corporatization" of health care delivery. I should hasten to add that "corporatization" needn't mean a for-profit corporation. As I mentioned in a previous comment, there may be something to be said for a mission-centered, not-for-profit corporate approach to health care delivery. Not least, it eliminates the pressures from a stockholder class for profitability and stock price, regardless of delivery quality.
ReplyDeleteI have little heart for these discussions any more. Sen. Debbie Stabenow's has introduced three bills designed to make some (very) modest reductions in drug costs. I have seen no analysis, but they might help.
ReplyDeletehttp://www.mlive.com/news/flint/index.ssf/2018/03/stabenow_announces_three_bills.html
The real problem with drug costs is the time it takes for the drugs to go generic. I have told my docs not to bother writing me a scrip for anything not available generically because the co-pays are too high or insurance will reject it. My GP and Rite Aid pharmacist have been whizzes at figuring out how to keep me going on the cheap stuff!
Please be aware of the right-to-try drug law, which will not provide experimental drugs to more people than current last-chance laws, but will instead leave FDA reporting out of the loop so no one will know whether the drugs were effective. Even drug companies don't like this law.
I need to go back to when Jim said:
ReplyDelete"The trend toward oligopoly (consolidations, mergers and weaker providers going out of business, with the result that a handful of large producers control the market) is pretty much a universal economic law - it happens in all industries, all sectors of the economy, unless government acts to prevent it..."
That is a counsel of despair. There are very few economic laws. Most of what the economists "tell" us is either analysis of what has happened or propaganda for their corporate employers.
The trend toward oligopoly is a natural result of unchecked greed, but not economic necessity. We used to rely on religion to check greed. Now, as Jim says, we rely on government.
That is prologue to pointing out that non-oligopoly medicine wasn't any great shakes, but oligopoly medicine is going to be worse. Why? Because medicine is not a commodity. Never underestimate a greedhead's ability to turn things that shouldn't be commodities into commodities. When Enron went belly-up as the accounting scam it was, it had a contract with the Thatcher government to manage most of the (public) water in England. Imagine Google "managing" the Great Lakes.
For the past 40 or so years the greedheads have been trying to turn education into a commodity. Step 1: Attack teachers as greedy and teacher unions as being as bad as Peloooooosi. Step 2: Squeeze the public education budgets of the states until schools are as bad as you say they are. Step 3: Encourage rich parents to form volunteer fund-raising programs to provide their kids with what the state should be providing so the parents won't bitch too much while you: Step 4: Announce that only public-supported "charter" schools can save the poor, benighted inner city kids you have been making life miserable for. And make sure you own the private companies that own the charter schools.
The same process, step by step, is under way in medicine.
We won World War II, in part, because our public school system was so good (It set the standards private and religious schools had to meet.) So while our guys figured out how the fix their Jeep, the German guys were sending their jeeps back to Stuttgart where someone would know how to repair them.
Oligopoly is not a law, and it is not inevitable. Coincidentally, Pope Francis's Prayer Group (Morning Offering) intention for April is: "That economists may have the courage to reject any economy of exclusion and know how to open up new paths."
Tom - the trend toward oligopoly is an economic law. That doesn't mean that it was passed by humans. But it's the way that humans, in the aggregate, behave naturally unless they agree to check themselves via man-made laws.
DeleteOligopoly needn't ill-serve us. But it does require will on our part to set constraints. Oligopoly itself is really just a way-station on the way to monopoly, which almost certainly does ill-serve us. And it's not clear to me that we even have the will to prevent monopoly anymore; most or all of the high-tech gazillionaires got that way by creating de facto monopolies. It's the usual roll-call of tech success stories: Google, Facebook, Amazon, Microsoft. Uber may still get there.
If it's a counsel of despair, the despair should not be over the fact of oligopolization - that's like despairing over gravity. The despair should be that we seemingly lack the collective will to apply moderate constraints on oligopolization.
Jim, Consider the Dollar Store. Consider craft breweries. If consolidation is a law, diversification following consolidation is also a law. Big and fat doesn't last.
DeleteOligarchy is an impulse. And a bad one from many angles. It doesn't have to be that way. As Francis says, the economy is made for humans, not humans for the economy.
"Oligarchy is an impulse".
DeleteTom, I assume that was just a slip of the pen, so to speak, as we're talking about oligopoly, not oligarchy.
I wouldn't consider an oligopoly to be an impulse. It's the aggregate or collective outcome of a set, probably a large set, of independent impulses - or better yet, a set of freely made decisions. Company A's leaders decide to sell the company to Company B rather than continue on as an independent entity; the result: one step closer to oligopoly in whatever marketplace A and B had competed.
Are oligopolies bad for humanity? I'd hesitate to say either "yes" or "no". A marketplace is a very complex social construction. I think it's likely that all oligopolies have both pros and cons for individual consumers (which is to say, individual human beings).
To offer a rather anodyne example of pros: whenever I travel on business, I book the flights, the hotels and the rental cars through the company's travel service. The company steers me toward particular airlines, hotel chains and car rental agencies. All of them offer their services nationally and even internationally. That makes it efficient for me, the traveler: I know I'll get predictable price and quality for my airline, my hotel and my rental car on every trip. Airlines, hotels and car rental agencies all are oligopolistic markets. My price and experience would be a lot more unpredictable if these large companies didn't offer a consistent level of service over wide areas.
You're right, too that, given a long enough time horizon, oligopolies lose their market power; generally that's because the markets themselves change. One of the big benefits to being a member of an oligopoly is that oligopolies typically erect barriers to entry; for example, it's hard for a newcomer hotel proprietor to achieve the scale of properties to join the hotel-chain oligopoly. (The most efficient way to do it probably would be to buy a whole slew of smaller chains and independent hotels in many locations, which incidentally serves to concentrate even more of the market power in the oligopoly as those small players and independents are gobbled up). But over a long enough time horizon, the marketplace gets redefined. Thus, Air bnb may render hotels obsolete for certain classes of travelers.
At any rate, I expect the same is true of oligopolies in health care delivery: they would have both pros and cons. I like my small-partner doctor/patient relationships, but I recognize that the model is somewhat under siege these days, and may not be a sustainable model in a poor neighborhood. Doctors as employees of a large corporation may not be as desirable as doctors as independent proprietors, but doctor-as-employee may allow health care services to be extended to geographic areas that otherwise would be health care deserts.
Great topic in light of this coming Sunday's readings; the first reading is Luke's famous description in Acts of the communal life in the early church, in which those who had goods and property sold them and used the proceeds to feed and clothe church members in need.
I probably said "oligarchy" because I had been wrestling with "non-oligopolistic." I hear what you are saying (I think), but I can't get there from my starting point.
DeleteWhich is: What we call "the economy" is the result of an effort to describe what is happening when a bunch of people motivated by whatever (improving mankind, getting rich, paying back their parents, one-upping their fathers, ordering people around, own a Lamborghini) run into a bunch of people who just want to have enough money to play catch with their kids or go fishing on the weekend.
Raising that to something like a science with laws describing its inherent nature strikes me as looking for a doctoral level degree that doesn't require a supercomputer (i.e., slide rule in my day).
So far as I can see, if there is any good solution to our medical care crisis, and it's not a sure bet that there is, then it will have to be some version of a single-payer solution. As things now stand and have been developing in the last several decades in this country, the trend toward "oligopoly" cannot deal with the issue of the justness of the distribution of medical care to the poorest parts of our population. Whether the medical institutions (medical practices, hospitals, pharmaceutical products, whether for-profit or not-for-profit< are increasingly run by managers like those in any other industry's corporations. Payments to the managers is based on monetary considerations, without reference to the "just distribution" issue.
ReplyDeleteRegrettably, we as a society don't display much ability to think in terms of the justness of the distribution of available benefits.
At least one other issue is relevant here. The pursuit of physical longevity, in research as well as in most parts of our society, almost certainly cannot continue to be pursued without practices that effectively cull some people out of the group receiving attention.
An example: I'm 85. Tomorrow I'll begin a high tech prostate cancer treatment called Cyberknife. It promises a complete cure, not remission. A cure. With the insurance I have, I can afford it. How many men could? I will be using medical resources that, in some cases, could well be delivered to others who are at least as appropriate candidates.
Given the state of discussion in society and given the drift toward "medical oligopoly," I can't find a language, or a community, with whom this large issue of distributive justice" can be thought through sensibly. I have some sense of encroaching on others' well-being, but in this context, refusing the treatment is equivalent to spitting into the wind.
Good luck with the treatment, Bernard. I'll keep you in prayer.
DeleteYou shouldn't refuse treatment if it will help you. This isn't a problem that should make those with wealth and good insurance feel guilty. It should make those who are cinching the purse strings on the poor feel guilty.
DeleteThey scream about "death panels for Gramma," while they effectively box the poor and working class into limited care coverage.