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Has our Healthcare System Lost its Focus?

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By agingtarheel
June 17, 2004

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Inspired by the "Big pharma" thread I have something to share that speaks to the big picture. To me, the US healthcare system is broken and facing a crisis that could undermine our political and democratic system. Healthcare costs are out of control. HMOs cannot control costs and have created an inordinate burden of documentation and red-tape. Physicians now spend more time with paper than with people. A single hospitalization creates more paperwork for the physician than filling out a state and federal income tax form. Moreover, overhead and administrative costs are outrageously high: over 20 percent for some private insurance companies (Medicare overhead is about 2 percent). Locations of care for acute services, medical services, nursing services, mental health services, public health and preventive services and long-term care are fragmented and compartmentalized with almost no integration or coordination. Physicians are often micro-managed (e.g. having to comply with numerous drug formularies). Primary care physicians are significantly underpaid for their time and expertise compared to specialists.

Business and labor are being economically squeezed. If companies have 10 to 20 percent annual health-care increases, they cannot afford to give raises or add new jobs. Older companies (e.g. GM) have significant lifetime obligations for the healthcare costs of their retirees compared to startup companies that offer minimal health coverage and have no retirees. Unionized companies face competition from non union competitors (e.g. WalMart) with healthcare coverage being a major concern for organized labor. Even affluent Americans face a reality shock when they visit crowded Emergency Rooms and are made to wait for hours even though they carry "gold plated" insurance.

Drug costs are skyrocketing. Some Canadian discounts are up to 65 percent of US drug costs and some drug chains have markups as high as 1400 percent. Manufacturers claim research and development and product liability costs.

Managed care has not worked. It is based on shifting financial risks from purchasers and insurers to patients and providers. This creates perverse incentives for the overuse of services while the system excludes more and more people each year. Some CEOs make over $1 million a year compared to $120,200 for the average primary care physician. Physicians complain (sometimes legitimately) about professional liability, health insurance, the pharmaceutical industry, hospitals, and government. But MDs write the costly prescriptions (when cheaper alternatives exist) and order the expensive diagnostic tests and therapeutic interventions (when a more thorough physical examination might suggest less expensive alternatives).

Throwing additional money at healthcare does not necessarily produce improvements in the health and well-being of a population. To be sure, the US has the best and most modern healthcare that money can buy but for the huge investment we fail to efficiently turn dollars into healthcare. The US spends 14 percent of GDP on healthcare and according to the WHO ranks 37th out of 191 in healthcare quality behind all the Economic Group of Eight countries (we rank 72nd in efficiency, behind Cuba (36), El Salvador (37), Iran (58), and Bosnia Herzegovina (70)). Our economic competitors spent about half (7-8 percent of GDP) what we spend and provide better care and return on healthcare investment. We spend $1.4 trillion annually, ($5,000 for every man, woman and child) and yet we leave over 40 million hard-working Americans without healthcare coverage. In truth, we only spend about $825 million annually for patient care. About 31 cents of every American health-care dollar goes for administration, another 10 cents goes for other "non-care" expenses (See NEJM August 2003). Medical-malpractice costs would add another 4 or 5 cents. The worst case among our economic competitors is about 15 cents per dollar for non-care expenses. So, our healthcare bureaucracy is 250 percent less efficient than our competitors. If our administrative costs were reduced to 20 cents per dollar (versus 15 cents elsewhere), our society would save $300 billion every year (If we equaled the administrative efficiency of our competitors, we'd save $400 billion a year without touching the $825 billion we currently spend for patient care. These savings are not a theoretical abstraction: all our economic competitors already do this.

What is the core problem? Our healthcare system seems to be immune to our American system of checks and balances. Much of our political establishment and many deep-pocket special interests have huge stakes in maintaining the status quo. Pharmaceutical lobbying and private sector bureaucracy is a major factor.

Fears that universal coverage or a national single payer system is "socialized medicine" and political rhetoric that calls it "big government". Does universal coverage mean "socialized medicine"? Discussions of health care are couched in ideological terms rather than on what is economically viable so change is summarily dismissed as "socialized medicine," which limits the discussion and distracts from the real issues. Our current health care system could be labeled "privatized socialism" because private entities (as opposed to the federal government) dictate which doctors we can see, how much they can charge, and the kinds of medicines they can prescribe. Most of our global competitors give more control for private-sector care providers than we do and they rank higher in health quality. How long will we tolerate this empty rhetoric to protect the status quo?

Healthcare is too precious to be considered a business or a marketplace commodity. Whatever system we choose must commit itself to the needs of the population and the global community, not simply our own personal needs. It must be based on needs not based simply on service expansion (with aggressive marketing to create demand � "Ask your doctor about ...").

The patient's suffering and distress (the illness) is the focal point. Service delivery should be comprehensive, humane, non-judgmental, and ideally, free at the point of service. Patients should be able to choose among providers and preventive care should be emphasized and interdisciplinary teamwork should be encouraged and facilitated. Advanced communications technology should be used when appropriate to transcend barriers of access, distance, isolation, and neglect. Our dollars need to be focused in a fair and morally responsible way to reduce suffering and distress. If not, the global inequities will threaten global security and destabilize global programs. Given our current political climate, it seems unlikely that the future healthcare system will be less reliant on government dollars.

We need a program of universal health coverage that eliminates the middlemen. Funding will be the greatest challenge but numerous opportunities exist and a creative management system can be devised. Excessive management overhead and CEO compensation should be slashed. Physicians could be generously salaried based on skill, schedule, and experience. Real progress will depend on stronger primary care health systems that integrate preventive care with treatment for acute and chronic illness. This primary healthcare system has to include the entire population because HIV, polio, SARS, and mad cow disease do not respect political or socioeconomic boundaries. And we could learn from other countries (Great Britain, Germany, Sweden, and Japan for example) that view healthcare as a basic human right.

How much more productive will we be as a nation, if we have healthier people who do not live in fear of losing their health-care benefits or of facing bankruptcy because of illness? How many domestic jobs will stay in America and how much will wages be able to increase if healthcare costs are contained? How much "outsourcing" of jobs overseas will be eliminated if businesses do not have 15 to 30 percent of their payroll going for health insurance? Our products will be more competitive and our economy will be more secure. As mankind evolves, with the goals of peace, security, economic opportunity, freedom of speech, and freedom of religion, freedom from illness will be seen as the cornerstone of global harmony. It is time for us to develop an ethical system of healthcare for all. We cannot prosper and have it any other way.


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