Lessons from the US Health Reform that’s Already Failing

It’s not often I bother reading the numerous articles I come across everyday on US health system reform. But Atul Gawande is a man of clear thought and once again proved he understands health – though I don’t agree with him entirely.

In this article he highlights the failure of recent Democrat reforms to address rising costs and quality in health. He then goes on to say that government intervention can lower costs and improve quality just as happened in agriculture in the early 1900’s.

His argument is intriguing for a number of reasons.

Like many commentators he criticises the free-market approach in health yet fails to realize out that health is not a ‘laissez-faire’ market. Anyone with a basic understanding of markets realizes that there is a fundamental imbalance in health. This McKinsey’s report, for example, explains how most health systems lack a rigorous approach for matching clinician supply with demand for health services. This is despite the clinical workforce using around 60% of the $4bn spent on health each year. In what other industry is there a shortage of 60% of market supply?

The agricultural revolution analogy he uses is obviously a loose one. One cannot compare the complexity of health with the farming system of the early 2oth century. Gawande’s purpose is more to demonstrate that top-down reforms can cause effective change.

You might read his story and swell with sudden belief in the power of the progressive Obama administration to deliver the perfect medicine to our ailing system, from the top down. The success of government intervention in agriculture, however, is one example of top-down success against the myriad of failures well documented in change management science. Indeed, health is perhaps the best example of failure to change with every Democrat president sice Roosevelt having tried and failed.

Top-down reform will be necessary in the interim to accelerate change. But long term I firmly believe that less regulation (without completely removing oversight) is what health requires.

Let me give a small example. In the USA they are looking at a new model of primary care. It’s not unlike the superclinics our Rudd government is building. What strikes me immediately is that they are very much ‘models of the moment’. They are attempts to use existing resources and infrastructure to change health delivery. As Einstein said however, ‘you can’t solve a problem with the same thinking that created it’. Here we are trying to use the same structures, albeit in a re-jigged format, to solve the problem!

Indeed, the Rudd superclinics are already failing: see super clinic an expensive joke.

Health: Where to from here?

This is truly THE global question today. But just as the Nobel peace prize committee has established itself as a questionable zeitgeist, I fear many health reform commentators are doing little more than talk. This beckons a general comment about two important recent developments, and a personal statement about the future of this blog.

There have been two announcements that made me sit up and take notice of late. Actually, make that three.

The first was from Dr. Ezekiel Emanuel in a speech to the Medical Group Management Association annual conference in the USA. I quote, “The problem in the system (healthcare) is not that we don’t have the right technologies,” said Emanuel, chair of bioethics at the National Institutes of Health, in addition to being the older brother of White House Chief of Staff Rahm Emanuel. “It’s how we connect with patients.”

That statement – how we connect with patients – sums up what I believe is the unstated need central to healthcare reform. Too many people are approaching things from an economic or systems focus when ultimately, everything depends on patient needs. This truism deserves more explanation.

Emanuel went on to speak of increasing this connection by making healthcare accessible in non-office settings including online. He also advocated such things as non-physician care when practical, on-site health clinics at large worksites and even a return to house calls.

This leads onto the second and third developments of late. The second is that NEHTA announced a shift in strategy on Australian health records. Realizing that a national centralized behemoth was never going to happen this century, they’re turning to industry to tout their wares. This is a great and sorely needed shift.

The third was a lonely voice crying in the medical training wilderness of Australia.

It comes from Michael Moore, not the doco-joker, but former ACT health minister. He says Australia’s medical colleges should hand over responsibility for training specialists to universities.

Now chief executive of leading advocacy group the Public Health Association of Australia, Moore said the change would lead to more trainees, easing fatigue loads. He said overworked doctors could thank the closed-shop attitude of their supervising colleges for ensuring trainee numbers “aren’t too high”.

“The training and control of who gets into the specialist programs is in the hands of colleges and it’s a poor system because it clearly suits the colleges to have fairly restrictive entrance,” he said. “If they maintain a relatively poor supply and a high demand, obviously they’re going to make more money. The logical system would be to take the training completely away from the colleges and move it to universities.”

This surely suits the current governments reform agenda. They are clearly frustrated by the closed-shop attitude of several medical colleges. The question is how this can be done?

These last two changes both point back to the first: health reform should begin with, and target, areas where patient needs can be met. Other changes will then follow more easily. If we go after big and immovable targets we will fail. but if treat health as the dynamic marketplace it is, and meet patient needs, the resistant stakeholders will be forced to follow lead. The introduction of patient controlled records and the broadening of medical training are key steps in this direction.

I want to finish by apologizing for my lack of posts in recent weeks. While busy with other things, I’ve also had some time to think about where to spend my time in the near future and am considering wrapping up this blog. Or at least rolling it up into something more specific such as a tool for research/reports on advancements in primary health management. I see little value in generating more gas around this roaring healthcare fire and hope to capture and funnel this heat towards building something worthwhile.

Health Care Reform begins with the Individual

It’s great to hear a voice of reason amidst all this mudslinging, particularly in the USA where the possibility of any major reform is dimming by the day. And it comes in the form of an MD who reminds us that ultimately it is individuals that are responsible for their care and that much illness is preventable by better behaviour.

While we focus on the cost of drugs, procedures and insurance, it is easy to forget that we are treating people that are sick for a reason. In Australia, as in much of the USA, our current system is basically like going shopping with someone else’s credit card — no limit, no penalty, no shame. People have very little to discourage them from getting overweight, for example.

Now before you suspect me of promoting draconian fat-taxes and like measures – hear me out. The best guarantee of health in any society are norms and customs that strongly encourage healthy living. These take time, however, to develop, and can easily be lost. Then there will always be those that ignore them anyway. As it stands we have a long way to go before people are fully empowered to aim for better health.

For this reason there is increasing focus on health education. But more can be done. One great suggestion is the idea of an ‘individual health road map‘. This is a plan given to you by your health care provider that outlines all the critical steps required for an individual to maintain, insofar is is humanly possible, their health. For example, a diabetic could be given the standard of care plan for diabetics, and if he/she actually showed up, without fail, to the doctor, the podiatrist, the nutritionist and followed their subsequent recommendations, he would be less likely to require hospitalisation and expensive treatment and society would not shoulder his cost. If he misses these critical steps in his care, he pays, not us.

Obviously, any similar system must be implemented with great concern for people’s well-being – and no-one should ever be refused health care. But as it stands, we have low expectations of individuals and place very little pressure on people to truly live healthy lifestyles. Such a form of insurance may be the best reform yet.

I’m also encouraged to read that another web-based patient support tool is being developed. It’s part electronic medical record, part drug encyclopedia, and part patient chart known as the Pediatric Knowledgebase (PKB).

The PKB integrates the hospital’s medical records with drug-specific decision support generated by clinical pharmacology experts and clinical caregivers and predictive models generated by a hospital’s pharmacometric and informatics team. Forecasting tools evaluate dosing scenarios to be explored via a user friendly interface that front-ends a pediatric population-based PK/PD model. The result is therapeutic drug monitoring for children that uses patient data to help predict outcomes and inform clinical decisions in individual patients.

NHHRC: Medicare Select – What is it?

Our Parliamentary library has a good analysis of Medicare Select for those of you wondering what Option C means in the NHHRC report.

I would like to see this option compared with a ‘healthcare credit card’ system. From the analysis and debates I’ve heard on Medicare select it seems a real sticking point is the lack of flexibility it actually brings. While it would add increased competition to the market, people are ultimately still quite limited in their options of care. In some respects they are more limited. For example, now people can go to virtually any public hospital for treatment. Under Medicare select my superficial understanding is that they would be limited to a chain of hospitals, much like the HMO system in the USA. For this reason many doctors don’t like the concept either.

A credit card system would give every individual a base level of money to spend on health and allow them to spend it wherever they chose. I believe that one reason health literacy is relatively low in Australia is that we don’t need to take responsibility for our health and how we spend on health. Giving people purchasing power would allow them to learn what relative costs are in healthcare.

Clearly though, this system needs a full analysis of its own.

Want to Reform Healthcare? Start with the Workplaces

According to the World Health Organization, the U.S. spends by far the most per capita on health care but by most measures ranks not even in the top 30 countries in terms of health-care outcomes. If we want to improve Americans’ health and reduce our health-care expenditures, we need to understand why. There are many causes, of course, but I’m convinced one of the most important — and most overlooked — is our work culture. Working in America is literally hazardous to your health.

Read the rest of this interesting opinion piece by Jeffrey Pfeffer of BNET.

NHHRC Report Dissection

The National Health and Hospitals Reform Commission’s report is being gradually dissected by various stakeholders. Here’s a few quotes from the big fish (courtesy of the AHHA).

Australian Medical Association Federal President, Dr Andrew Pesce: “(It) is clear that (the report) properly focuses on some critical areas in health. The AMA’s objective now is to ensure the emphasis on the needs of patients is reflected in the final policy. In particular we want to make sure any extra funding goes to the bedside, the clinic and the surgery – not into more bureaucracy.”

Australian Dental Association, federal president Neil Hewson told ABC News Online: “The long awaited final report of the National Health and Hospitals Reform Commission released by Prime Minister Kevin Rudd demonstrates the same lack of appreciation of dentistry and the problems with dental care delivery as the earlier Interim Report. Those people who already have access gain more access and disadvantaged people are still disadvantaged so therefore we believe targeted programs of funding is the best way to ensure that disadvantaged actually do get their dental health improved dramatically.”

Australian Nursing Federation Federal Secretary Ged Kearney: “Community access to good quality primary health care is pivotal to easing pressure on the public hospital system. The widespread establishment of these centres and services, run by teams of health professionals is a positive initiative. Aged care is in desperate need for good reform, the population is ageing, people’s care needs are increasing and nurses and assistants in nursing are under intense pressure. But putting the burden of funding on older Australians, perhaps forcing them out of their homes, because they are in need of high level care is not an answer.”

Mental Health Foundation of Australia: “What (Medicare Select) would enable people to do is actually cash out all the services they might normally get through the health service system and use them in ways that will benefit them,” chief executive David Crosbie told ABC News Online. “That might mean improving their access to housing, improving their access to employment, improving their access to other supports that are actually going to make a difference in how well they cope. What we need to do is put in place a whole range of better access points and ways for people to access mental health services, and better quality services. That means not just more money, it means re-orientating the current health service system so it is actually responsive to people’s needs, and that means a lot more than simply putting money in.”

Public Health Association of Australia President Professor Mike Daube: “We welcome especially the emphasis on prevention and on other important issues such as mental health, Indigenous health, dental health and palliative care. PHAA is particularly pleased to see strong support for the establishment of a new National Preventive Health Agency.”

The Rural Doctors Association of Australia: The association’s president, Dr Nola Maxfield, says the commission has forgotten to include recommendations on how to encourage health workers to remote areas. She says recommendations such as locum relief and reducing HECS have already been tried, and only higher wages and improved working conditions will encourage doctors to go bush. Dr Maxfield says if something is not done now, things are only going to get worse. “The doctors are getting older and more tired and the young ones are not coming up,” she said.

John Della Bosca: argues that the election of the Rudd government and the commitment of the states and territories to work collaboratively on public health presents a once-in-a-generation opportunity. Yet the debate about how we turn this opportunity to our collective benefit needs to be much more than a turf war about which hospital department is funded by which tier of government.

Fiona Armstrong, Centre for Policy Development: argued that the National Health and Hospitals Reform Commission’s report puts forward a weak and flawed approach that will further entrench the blame game and cost-shifting. She also said that the proposal to hand control of primary health care to the Federal Government but for the states to continue to be responsible for hospitals will do nothing to deal with the issue of inequitable access.

Dr Jeremy Sammut, of the Centre for Independent Studies: argued that increasing government funding to increase the number of public hospital beds by 15 per cent is a one-off solution that will not solve the issue. Instead, the National Health and Hospitals Reform Commission, which has made 123 recommendations to improve the nation’s health system, should have focused on cutting bureaucracy. Dr Sammut is the author of a report, issued last week that finds Australia’s public hospital beds rate 2.5 per 1000 people is well below the OECD average of four beds.

Allied health: The National Health and Hospital Reform Commission has called for extra investment of $140m to $330m a year to dramatically expand the number of services provided by allied health services on referral from a general practitioner. The commission also proposes allied health workers be able to refer patients to medical specialists to ease the logjam at doctors’ surgeries.

Tony Abbott’s plan for hospitals: A Coalition Government would devolve the running of the nation’s public hospitals to the private sector, community groups and charities, Opposition frontbencher Tony Abbott says. “We wouldn’t run them with public servants,” he told the Ten Network on Sunday. Mr Abbott, a health minister in the previous Howard coalition government, said it was time to give the public hospital system back to the people. His vision includes the establishment of local hospital boards with the power to appoint their own chief executive and the ability to retain revenue from privately-insured patients. “It is a dog’s breakfast of divided responsibility,” Mr Abbott said of the present system where the states blamed the Commonwealth for lack of funding. The Commonwealth, under a coalition government, would devolve management of public hospitals in the same the way it did for the employment services network and nursing homes.

My TOP 4 summary:

1. Encourage the establishment of primary care centres where allied health and GP’s work as a team. There are too many disincentives to go into general practice at present.
2. Open up health training to make roles and responsibilities more flexible (prevent closed-shop systems).
3. Give patients more tools to manage their own health including better information about prevention, access and treatment options.
4. Sell the hospitals, or at least make them accountable (I agree with Tony).

Australian MBS and PBS Update

Legislation for nurses and midwives to be given access to the Medical Benefits Schedule (MBS) and Pharmaceutical Benefits Scheme (PBS) for the first time has been introduced to the House of Representatives by Health Minister Nicola Roxon.

The Health Legislation Amendment (Midwives and Nurse Practitioners) Bill 2009 will mean that patients who receive prescriptions from nurses will pay the PBS price rather than the private prescription price. It would not become effective until November 2010, Ms Roxon said.

“The Pharmaceutical Benefits Advisory Committee will be consulted about the range of medicines nurses and midwives will be able to prescribe and the circumstances under which medicines can be prescribed. Advice will also be sought from clinical experts and health professionals practising in the relevant clinical fields,” a statement from the minister said.

As debate on the bill continues, the Pharmaceutical Society (PSA) has suggested we also begin to consider prescribing by pharmacists to help facilitate a more efficient health system.

The Gender Imbalance

Not so long ago, everyone spoke about the male domination of senior healthcare positions. This is slowly changing, and perhaps even set to accelerate if recent research holds true.

This article, Boys will be doofuses, in Meratornet, highlights research by Mark Penn that shows men are behind women on almost every significant sociodemographic measure in the USA. It is worth a read, particularly for those involved in the mentoring and education of men.

It is also worth considering what impact this will have on the future healthcare workforce. There have been numerous reports (and here) since the 1990’s outlining the impact the increasing number of female graduates will have on the healthcare workforce, but what has been done to deal with it?

National Registration and Accreditation Scheme

The new system will for the first time create a single national registration and accreditation system for ten health professions: chiropractors; dentists (including dental hygienists, dental prosthetists and dental therapists); medical practitioners; nurses and midwives; optometrists; osteopaths; pharmacists; physiotherapists; podiatrists; and psychologists. The new arrangement will help health professionals move around the country more easily, reduce red tape, provide greater safeguards for the public and promote a more flexible, responsive and sustainable health workforce. For example, the new scheme will maintain a public national register for each health profession that will ensure that a professional who has been banned from practising in one place is unable to practise elsewhere in Australia.

For the latest details see Health Workforce Australia.

The global Pharma vs Government Battle

Lines are being drawn across the world and increasing pharma battles are displayed in our media. In Australia, much of the possible reform centers around the PBS regulations. While in the US, the debate is being carried far wider to include issues such as comparative effectiveness research and reforming the patent system. What will be the outcome? Is targeting pharma for cost reductions a good idea?

In this WSJ op-ed, Eli-Lilly boss John Lechleiter argues the benefits of pharma innovation. He cites the independant research saying pharmaceuticals have added 40% to our life expectancy in the last 20 years. He reminds us of the 800 new anti-cancer drugs currently in development – not to mention the countless other therapeutic areas. He sums up by saying that government involvement is more likely to create hurdles to better healthcare than to make it cost effective.

This argument has not been bought by everyone. It seems the US Democrats are preparing to counter the idea that treatment ‘choice’ will be limited. 

These discussions are important, for no person wants to stifle innovation. The recent increase in pharmaceutical company mergers may be seen as an indicator that pharma companies will engage in less innovation as product pipelines converge. These mergers are also a sign that not all companies are doing so well. And to me, this is where the real debate should lie – generating value for money in a profit making market.

In 2006-07, Australia spent 14% of it’s health budget on pharmaceuticals. This amounts to about 1% of our GDP. We are below average OECD spending on health and medicines. While spending on health and medicines is growing, so is demand for better treatments. The real question is: are we getting value for money?

Many would argue no. In the 2006 PBS reforms, the government implicitly stated that it believed pharmaceutical companies were making too much profit (read this press conference for some interesting comments by the then health minister Tony Abbot). In this recent interview with Bill Clinton, a famously failed health reformer, he compares pharma to America’s Wal-mart saying that for most of the 90’s and 00’s, pharma probably had an 18% profit margin, while Wal-mart has 5-6%.

It may well be that pharma profit margins are high. But how do we measure too high? Do we believe that if it was a truly free market, then profit margins would not be so high – rather, they would be in the 5-6% range seen in other industries? Perhaps. I think it is difficult to determine what profit margins should be when we are unable even to put a good number on the benefit pharmaceuticals give to our population. After all, won’t we pay more for things we value more? The other side of this profit margin discussion is that the pharmaceuticals market will never be a ‘free’ one while the current level of government regulation is in place. While dictating that only the cheapest generic be available to treat a certain condition across the entire country may save on short-term costs, it will also limit company interest in competing in that sector, thus reducing competition and further innovation.

Clinton was quick to say we shouldn’t bash the drug makers. They are doing us a good service, and we agreed to fund their work all along. But, he argues, we’ve got to limit the rise in costs. He suggests they target profit margins, and improve the link between the patent and research process (a century old system). There is also a big battle developing over plans for cost-effectiveness research in the USA.

Whatever happens, I believe it is essential that government, media and industry all educate themselves well on the complexity of the health industry and the various options we face. Many of the reform suggestions we hear today seem quite limited in scope – perhaps for political reasons. In the final analysis, we have to ask ourselves what we actually want to achieve from all these reforms. If we focus exclusively on clawing back money because we believe profits are too high, we could be committing a fundamental error of economic judgement – the consequences of which will not be obvious for some time.