Monday, December 16, 2013

Top 10 Accomplishments of American Health Care

It’s that time of year when the OECD publishes its "Health at a Glance" comparative health indicators, and The Commonwealth Fund follows with an international survey of health care related activities. A cursory review of these documents always ends up with the customary assessment of American health care: much more expensive than all others, wasteful and inefficient. But this is the month of December, and health care workers are people too, so maybe a short moratorium on bad news and criticism may be in order, allowing these folks to pursue a little bit of happiness during the Holiday season. A deeper dive into the vast amounts of data in the OECD report exposes all sorts of measures where the United States health system performs magnificently. Therefore, without further ado, let’s look at the top 10 achievements of American health care.

Number 10: Generic prescription rates in America are highest in the world. In fact the rates are so high, that the OECD didn’t dare show them. The best generics utilizer in the OECD report was Germany at 76% of prescriptions volume in 2011. The U.S. comes in at a whopping 80% in 2011 and 84% in 2012. Not only that, but the U.S. is also #1 in per capita spending on medications, and if 80% are low priced generic drugs, imagine how many more drugs we get to take. This speaks volumes about our new value based health care system.

Number 9: America was once again able to maintain the second lowest number of physicians per capita among developed nations, and well below the OECD average. Obviously, this spells productivity like no other metric can, and it’s most likely due to labor saving innovations, such as Electronic Health Records. With medical school graduation numbers at the bottom of the pack, the future will no doubt bring many more innovations to further increase the efficiency of American doctors.

Number 8: Americans are making big strides in technology use for communicating with their doctors. We beat practically every single developed country at some email metric, which is irrefutable proof that Meaningful Use is working.

Number 7: As in previous years America is holding the line on hospitalizations. Way below the OECD average and practically last in cancer discharges (except Mexico, where they don’t have cancer), our health system figured out much more cost effective ways of treating an increasingly older population, which leads us to #6.

Number 6: No one, and I mean no one, spends less of their health care money on hospitals than the U.S. We are #1. And no one spends more than us on more efficient outpatient care, which includes inpatient physician services when billed separately. It seems that all those inflammatory articles in the media regarding hospital price gouging, are pure nonsense.

Number 5: Not only does America have less hospital beds than most OECD countries, we are not using them very much. With an occupancy rate second to last, it seems that if we closed a third of our hospitals, as some reformers are suggesting, we would be just fine (with room to spare), and we could save oodles of cash. Finding inefficiencies that are easy to fix is a good reason to celebrate.

Number 4: Quality of care for the people that do end up in a hospital is pretty good. On multiple variables of mortality and surgical complications, the U.S. is consistently among top performers. Not absolute best, but a top performer nevertheless. Not to mention that compared to the best performers, your chances of leaving an American hospital with an instrument lodged in your bowels are much lower than in some very high performing countries. For all the alarmists having visions of Jumbo Jets crashing out of the sky daily, killing thousands of innocent patients unbeknownst to anybody else, slow down folks, there are no Jumbo Jets; maybe a Cessna here and there, but definitely no Jumbo Jets.

Number 3: Our children are the best in the whole wide world. The Puritan founders would have been so very proud of them. American kids are dead last when it comes to drunkenness and smoking. Although they are just average when it comes to eating their fruits and vegetables, our 15 year old boys and girls are the most physically active of all other OECD nations. Strangely enough, they are also among the chubbiest, but with all that physical activity, this is bound to resolve itself in the long run. It may be too late for us, but the future looks bright for the young ones.

Number 2: America is the healthiest nation in the world, bar none. Yep, you heard right. Almost 90% of Americans consider themselves healthy, and I have no reason to doubt their self-assessment. Much has been said about other countries, having higher life expectancies. The difference between the U.S. and Japan is over four years of life, but consider this: less than 1 in 3 people in Japan report being healthy. I don’t know about you, but 78 years of healthy life sounds much better to me than 82 years of living with disease.

And the Number 1 accomplishment of American health care is (drumroll please) Obamacare. Yes, Obamacare went viral, probably through the Internet or something like that, because Obamacare is now a global phenomenon affecting every single OECD nation.
A couple of weeks ago Paul Krugman, winner of the 2008 Nobel Prize in Economics, and self-described liberal, let us in on a little secret. Obamacare, it seems, is the only logical explanation for the reduced growth of health care spending in the U.S., and Obamacare began “bending the curve” from the moment it was signed into law in 2010, long before it was formally implemented. Since according to OECD data, all other nations have experienced the same “curve bending” effect since 2010, we must conclude that Obamacare has reached all developed nations instantaneously (the Internet is very fast).
And in some cases (such as the UK, not to mention Greece) Obamacare seems to be working even better than in the U.S. So here you go, once again America saves the world…. Merry Christmas American Health Care!

Monday, December 9, 2013

The Implausible Manifestation of a Doctor Shortage

In a New York Times opinion piece Scott Gottlieb, MD joins forces with Ezekiel Emanuel, MD to inform us all that “No, There Won’t Be a Doctor Shortage”, and just to clarify, Dr. Gottlieb goes on to say in a subsequent Forbes article “That Doesn't Mean You'll Have Access To Them”.  Doctors, it seems, are destined to be like the lights of Hanukkah candles – only for looking at, not for using. As tempting as it may be, let’s not hastily assume that the more fortunate members of society, like the authors of these articles, are brazenly suggesting that maintaining a good supply of doctors for themselves, is as simple as denying everybody else access to physicians. Of course not.

To dispel our concerns that an aging population and expansion of health insurance may somehow require more doctors, Drs. Gottlieb and Emanuel urge us to look at the great State of Massachusetts where universal insurance has been in place for years and no shortages have been observed. According to the Census Bureau, Massachusetts has almost double the national average number of doctors per population, and by the authors own admission, its “experience may differ from other areas”. Looking at Mississippi, for example, would have been a stretch I suppose. Either way, policy makers should be all set, since the only place where doctors seem to be growing on cherry trees is our nation’s capital. Other than that, the New York Times article contains the usual innovative fare, being repeated now in most health care journals over and over again. The future holds marvelous technology advances that will minimize duration, complexity and intensity of treatments and non-physicians of all stripes will be delivering most of this now routine care (one interesting suggestion was that pharmacists should deliver urgent care). The main idea is that instead of “expanding our doctor pool, we should focus on increasing the productivity of existing physicians and other health care workers”.

Increasing worker productivity is where America’s exceptionalism truly shines. Labor productivity (i.e. the ratio of output to input) has increased in the U.S. by 254% since WWII (see graph above), and really accelerated in the new millennium. Unfortunately, compensation for this wonderful productivity, took a different path somewhere in the early seventies, hence the gaping divide between America and a handful of very wealthy individuals who benefit financially from productivity gains. The conservative Dr. Gottlieb and the progressive Dr. Emanuel are merely suggesting that this very successful business model should now be applied to the horrendously inefficient health care sector.  If you think about it, it becomes abundantly clear that this suggestion is actually an imperative. If we don’t find a way to integrate medical services in the lower-wages/cheaper-products innovation cycle, all those wonderfully productive workers will be unable to afford the medicines needed to sustain their blessed productivity.

The New York Times opinion piece, and the many others like it, are the theoretical foundation leading experts such as Dr. Gottlieb to conclude that “there’s every reason to believe that technology will continue to make the aging process itself (and the treatment of many diseases) a far less resource intensive endeavor – and ones that require fewer physician inputs for a higher level of “outputs” in terms of improved healthcare”. This is very similar to how restaurant chains, or canned food manufacturers, have a Chef that is shown designing fabulous new dishes, using market fresh ingredients, on TV commercials, but the actual “outputs” in each establishment, or can, require practically no Chef inputs. And this is why health care is strongly encouraged to learn from other industries that mastered the art of maximizing outputs to inputs ratios. Fair enough, but how do we know that we have enough Chefs or doctors to start with? Luckily, Dr. Gottlieb has valuable insights on this question as well. The argument is that “if there was a shortage of physicians, it wouldn’t be so easy for the Obamacare health plans to push around doctors and trim their pay”. The same logic is used very effectively by defense attorneys in rape cases where the victim did not scream or kick hard enough. 

When analyzing things from an economic perspective, shortage of something implies that demand exceeds supply, and demand does not mean need or even want; it means willingness to pay. For example, one could observe that we have no shortage of private trainers, not because people don’t need to work out, or because they wouldn’t want a personal trainer, but because most folks are not willing or able to pay for one. Demand, and subsequent shortage, is also a function of culture. There is no shortage of wholesome and freshly prepared foods today, because our culture has been altered to have different expectations from food. Preemptively changing perceptions and expectations is therefore paramount to preventing shortages. So if back in the 1990s HMOs were “soundly rejected” by the people, according to Dr. Gottlieb, “[w]hat Obamacare, in effect, tells Americans, is that the White House believes many people made the wrong choice when they rejected those HMOs in favor of PPO plans that offer broader access to providers”. Of course we did.

You hear frequently today how fixing health care requires a cultural change; how we must choose wisely and how we should not expect that everything is done to prolong individual lives; how we should become more accepting of death and how we should quit running to the doctor every time we are sick; how we should learn from Rwanda and how we should fear the killing fields of conventional medicine; how we should value fast service and convenience above intrinsic quality. All these things are necessary to bring demand for physician services more in line with productive workers’ ability to pay for medical care, and as worker compensation continues to shrink, we may end up with a surplus of doctors, which in turn will make pushing them around and trimming their pay even easier, as Dr. Gottlieb writes in conclusion: “In the future, there will be enough doctors for you to choose from. Problem is, in many cases, the Obamacare health plans won’t pay for you to see them”. And it won’t need to, because by then, you will be conditioned to not demand to see them.

Everywhere on this planet, physicians’ professional status, autonomy and compensation, are inextricably tied to the same metrics for the patients they serve. It is plausible and perhaps understandable, that physicians who were and still are the highest paid professionals in the land, considered themselves immune to the increased exploitation and marginalization of all other American workers, including highly educated ones. The almost linear relationship between worker compensation and physician compensation, and the mathematical impossibility of becoming rich by tending to a nation of impoverished workers, must have escaped our best and brightest, until now.

The harsh (and unpleasant for some) reality is that unless you can find your way to medically pamper “Internet moguls”, or happen to practice medicine on TV or at the New York Times, you are in the same boat as the McDonald's workers now rioting in the streets, perhaps in a much nicer cabin (for now), but same boat nevertheless. Something to ponder upon…

Update 12/11/2013: For a bit different, but more authoritative perspective, see Prof. Casey B. Mulligan's Economix article today.