Editor’s comment: While looking up other things, we found an amazing article about medical cost controls that brings up chilling and crucial thoughts for doctors, hospitals, nurses, risk and human resources managers and everyone involved in the workers’ compensation and group health care matrix.
We are confident, medical costs are rising and are certain to continue to escalate. If you note our earlier articles about spinal fusion surgeries in this state now being billed at $75,000 to $300,000 for hospital costs only, you can readily see medical costs are clearly outstripping all other costs in the workers’ compensation arena. We have a number of pending claims where the main fight is claimant wanting full payment of 100% of the costs of such surgeries from their employers under the WC and not group side.
U.S. health care costs have grown from what was about the middle of the average of OECD countries (Organization for Economic Cooperation and Economic Development) to what is now double the average. The surprising thing here is during the last ten years, the increase in workers’ compensation medical costs is twice the rate of group health increases.
The National Council on Compensation Insurance or NCCI has demonstrated the rise in workers’ compensation medical costs is due to lack of utilization review in workers’ compensation systems, leading to over-utilization of health care services, especially those for nagging and chronic soft tissue claims. This problem is a crucial stage in Illinois that brought in UR but sometimes sporadically uses and enforces. As we have told our readers, the “wise guys” who have a controlling say at the Illinois Commission don’t want it and feel it is bad for their business.
An observer named Atul Gawande, M.D. has published a must-read article in the June 1, 2009 issue of The New Yorker. He has demonstrated even more convincingly over-utilization of medical services, including testing, surgery and hospitalization, is the main cost driver of America’s health care system.
Dr. Gawande’s lengthy article, The Cost Conundrum, provides a clear position for why costs in the U.S. are becoming so wildly high, but outcomes remain mediocre. Dr. Gawande reduces the problem to its simplest terms. He outlines the American health care system has turned the medical profession into assembly-line work that focuses on lots of care at a spiraling cost. He states our physicians in primary care and specialties are economically incentivized to over-prescribe in all areas. He also clearly shows, the areas of the country that produce the highest costs due to over-prescribing also produce the poorest health care results.
Dr. Gawande analyzes health care in relatively rural McAllen, Texas, a town in a Texas county with the lowest household income in the U.S. He notes after Miami, this county has the second most expensive health care costs. Dr. Gawande wanted to know why. He also wanted to compare and contrast health care costs in El Paso County, eight hundred miles to the north with similar demographics that were 50% lower.
Dr. Gawande also analyzed the Mayo Clinic in Minnesota with some of the best medical technology on the planet and why it produces some of the highest quality medical care in the nation but has costs that rank in the lowest fifteen percent of the nation. He was also fascinated with why Mayo Clinic was able to replicate that amazing achievement when it opened a center in Florida that has one of the country’s highest cost states.
Dr. Gawande noted when he found excellence around the country, doctors worked together in teams. All of the doctors continuously peer-reviewed each other’s work. In low-cost, high-quality areas, physician income was somewhat neutralized; there was only a limited amount to be made. At Mayo Clinic, for example, doctors are all on salary and didn’t make more or less, no matter how much care was provided. Whether they order ten procedures or none, Mayo Clinic physicians and care-givers are paid the same. This is central to understanding how to fix the problem. As Gawande writes:
This last point is vital. Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks. Here’s how this whole debate goes. Advocates of a public option say government financing would save the most money by having leaner administrative costs and forcing doctors and hospitals to take lower payments than they get from private insurance. Opponents say doctors would skimp, quit, or game the system, and make us wait in line for our care; they maintain that private insurers are better at policing doctors. No, the skeptics say: all insurance companies do is reject applicants who need health care and stall on paying their bills. Then we have the economists who say that the people who should pay the doctors are the ones who use them. Have consumers pay with their own dollars, make sure that they have some “skin in the game,” and then they’ll get the care they deserve. These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor will make no more difference than changing who pays the electrician. The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care.
The Cost Conundrum, by Atul Gawande, should be required reading for anyone interested in understanding and participating in American health care reform.
The link is http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?currentPage=all. A bio on Dr. Gawande is at: http://en.wikipedia.org/wiki/Atul_Gawande
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