Wyoming's medical community confronts rising healthcare costs

— July 23, 2013

Wyoming’s healthcare community gathered in Casper last week to address an issue that is on everyone’s mind — and for once it wasn’t Obamacare. More than 200 insurers, hospital administrators, doctors, legislators, employers and government officials showed up to hear about possible solutions to the rapid rise of healthcare costs.

Specifically, the meeting covened by the Wyoming Business Coalition on Health centered on finding alternatives to the fee-for-service payments that number crunchers from the U.S. government to Nate Silver, a statistician and blogger at the New York Times, see as a major driver of healthcare costs.

Fee-for-service payments tend to drive up costs, experts argue, because hospitals and doctors get paid more if they see patients more often and perform more medical procedures. This high-volume, high-cost healthcare strategy makes money for providers and drives up costs for insurers and patients. But it does not make Americans healthier.

The United States spends more on healthcare than any country in the world — about $8,000 per person compared to the $3,000 median for the 33 countries that ratified the Convention on the Organization of Economic Cooperation and Development. But the U.S. ranks 29th in life expectancy and 40th in infant mortality among 193 nations that report data to the World Health Organization. The U.S. trails most countries in the developed world in virtually every benchmark index of health.

Dr. David Nash

Dr. David Nash (Ron Feemster/WyoFile — click to enlarge)

Enter Dr. David Nash, a medical doctor and MBA who teaches at the Jefferson School of Public Health in Philadelphia, one of six schools that make up Thomas Jefferson University, a medical school and academic medical center in Philadelphia.

Nash, who criticizes the Affordable Care Act for not allowing government to make even more radical changes to the insurance and payment systems, wants to see doctors and hospitals paid for value of care instead of volume of care.

That begins with developing a model that would pay doctors — and clinics and hospitals — for keeping a population of patients healthy instead of treating a (large) number of individuals who are sick.

“The laying on of hands in a hospital accounts for about 15 percent of health,” Nash said. “What contributes more to health? Things like socio-economic status, crime, income, and access to fresh food.”

And, Nash added, developing healthy habits. Nash asked his audience what percentage of all Americans exercise 20 minutes three times a week, don’t smoke, eat fruits and vegetables every day, wear seat belts, and weigh close to their healthy weight. The answer? Three percent.

Changing Americans’ bad habits does not require a visit to a doctor or hospital. But healthy behaviors can be encouraged by better patient management, by having a nurse or social worker check on the patient, or even by asking patients to submit data online. None of these systems is a big moneymaker for doctors or hospitals, however.

Near the other end of the political spectrum from Nash is state Sen. Charles Scott (R-Casper) who criticizes Obamacare for, among other reasons, creating a larger and more far-reaching federal healthcare bureaucracy. Although the two men would likely find little common ground in a discussion of the Affordable Care Act, Scott finds himself in agreement with Nash’s diagnosis of the country’s payment ills.

Controlling Costs

“I agreed with almost everything he said about costs,” Scott said. “But what I hoped to get from the meeting was specifics. We would need specifics to write legislation.”

Sen. Charles Scott (R-Casper)

Sen. Charles Scott (R-Casper)

When Scott stepped to the microphone to ask about specifics, Nash was curt. “Glib,” to use Scott’s term. He said very bluntly that it would be simple, if perhaps politically costly, to reduce the increasing cost of hospital care.

The first step he would take is to increase Medicare’s authority to experiment with lump-sum payments called “bundled payments” to hospitals for a few specific medical problems common to older patients. This system of paying based on “Diagnosis Related Groups” or DRGs, has been in place since 1983, when Medicare began paying hospitals a lump sum based on the patient’s diagnosis. Nash credits the system with modest reductions in patients’ average length of stay and small drops in unnecessary utilization of medical services and procedures.

If he could, Nash would cut the DRG payment to hospitals by at least 10 percent for congestive heart failure, community acquired pneumonia and myocardial infarction.

“I would tell the hospitals you have four months. At the end of four months, here is how we are going to pay you for these three diagnoses. You figure out how to allocate the payment internally to your doctors and your staff. That would change medicine overnight.”

Cutting the payments would save money, but it would also create greater efficiencies in the hospitals, Nash hopes.

“It would drive everyone to the table to sit down and discuss how we treat heart failure,” Nash said. “What is each person’s contribution? What works? The core here is that there is no self-evaluation or measurement of our day-to-day work. Because if you get paid no matter what the hell happens, why would you sit down and self evaluate?”

Under the current system, hospitals and doctors get paid once for making an error, and a second time for correcting it. No one, Nash points out, would accept these double payments to an automobile mechanic.

Medical Errors

Rep. Elaine Harvey (R-Lovell) is eager to hold hospitals accountable for errors, but she remains cautious about bundled payments and skeptical about their impact on care: “Are we going to have highly trained care? Or will we just get what the law allows?”

She believes that hospitals should develop a system for quality assurance before they begin to seek new payment models to control costs. Instead, she believes they should be transparent about medical errors and the price of procedures. This would spur competition and enable consumers to make better choices.

Rep. Elaine Harvey (R-Lovell)

Rep. Elaine Harvey (R-Lovell)

And like Scott, Harvey also finds significant common ground with Nash, who sees medical errors not only as costly, but also as a serious threat to health. “Medical errors are the fourth leading cause of death in this country,” he said.

Harvey is most concerned to track the medical errors known as “never events,” which are so named because they should never occur: Performing surgery on the wrong body part, leaving a surgical instrument inside the body, transmitting post-operative infection by failing to wash hands or clean instruments. There are many more.

If hospitals published their “never events” and also listed the exact costs of procedures, patients would be able to choose wisely based on quality and cost.

“Let’s say one hospital wanted $6,000 for a procedure but had one ‘never event’ and another hospital charged $12,000 but had no ‘never events.’ The consumer would be able to make an informed choice.”

Paying for wellness

Dr. Michael Tracy, the medical director at Powell Valley Healthcare,  is all too aware that his pay is driven by volume.

“I only get paid when someone comes through the door of my office,” Tracy said. “It isn’t only about procedures, but it does depend on patient contact.”

Although he believes that better outcomes could be reached by monitoring patient health, reducing the number of office visits and especially by keeping patients out of the hospital, he points out one reason why people might resist such a payment model.

“It hearkens back to the old days of managed care,” Tracy said. “Doctors were paid not to do procedures.”

Tracy, who participated in a panel discussion after Nash’s speech in Casper, believes that care coordinators would help keep a group of patients healthy at lower costs than a fee-for-service model.

The benefits are easiest to see in diseases that are easily tracked with data. Patients with diseases like diabetes or congestive heart failure benefit already from close monitoring. Many enter data such as blood sugar levels and weight in computer programs that alert the care coordinator when the values exceed a threshold level.

“The Veterans Administration is good at this,” Tracy said. Powell Valley Healthcare has a contract with the VA to provide care for veterans in the Bighorn Basin. “When veterans reach the age of 75, we start asking them about falls. If we see that they are in danger of falling we can take action to support them and prevent falls. It’s much cheaper to prevent a fall than to pay for expensive procedures like hip replacements.”

What next?

Nash was a provocative speaker who brought people together and sparked a statewide discussion. But he is back in Philadelphia and the Wyoming’s healthcare community has returned to work in small towns scattered around the state. The group discussed forming a committee to convene future meetings.

Vickie Diamond, the CEO of Wyoming Medical Center in Casper, expects future meetings to be most fruitful if the core group addressing payment issues can raise $100,000 to $200,000 for data collection and consolidation. She suggests that the legislature or a private foundation might take the lead in fund raising.

“The discussion needs to continue,” said Diamond. “We have to have a champion to drive the process.”

— Ron Feemster covers the Wind River Indian Reservation for WyoFile in addition to his duties as a general reporter. Feemster was a Visiting Professor of Journalism at the Indian Institute of Journalism & New Media in Bangalore, India, and previously taught journalism at Northwest College in Powell. He has reported for The New York Times, Associated Press, Newsday, NPR and others. Contact Ron at ron@wyofile.com.

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Published on July 23, 2013

  • gwarnock

    Wyoming is hardly a state to come to for an ‘ambitious’ physician, fee-for-service would put them in the poorhouse. Our partisan politicians do not understand, or even want to understand, healthcare, let alone the cost to their constituents for care,, Healthcare for ALL is not an option!

  • lorendn

    Once again Dr. Nash shows his great understanding of the problems and some realistic suggestions for a road forward. Then Senator Scott demonstrates the average politician’s lack of understanding of the problem and any meaningful solution. Maybe it is time that physicians create a workable, real-world plan and ask the politicians to authorize the process but keep their self-serving hands out of the writing of the bill.

  • http://equalitystate.org Dan Neal

    Kudos to Anne Ladd of the Wyoming Business Coalition on Health for organizing this conference.

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