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by Glyn Moody

Filed Under:
economics, healthcare, incentives

Why Even Good Hospitals And Doctors Are An Obstacle To Better, Cheaper Healthcare

from the perverse-incentives dept

As we noted in the context of antibiotics, it's well recognized that financial incentives cause the pharmaceutical industry to engage in research that tends to maximize profits rather than maximizing the health of the public. But a widely-circulated article in the Washington Post reveals another kind of bias that may stop us from adopting better ways of keeping people healthy that would also reduce healthcare costs.

This flows from the fact that countries with advanced healthcare systems are no longer dealing mainly with infectious diseases like turberculosis, as they once did, but with chronic ones like heart disease, diabetes, AIDS and many cancers. The key here is how best to manage the disease, particularly among elderly patients, and for that, doctors in hospitals aren't necessarily the best way:

Medicine has been so focused on what doctors can do in the hospital that it has barely even begun to figure out what can be done in the home. But the home is where elderly patients spend most of their time. It's where they take their medicine and eat their meals, and it's where they fall into funks and trip over the corner of the carpet. It's where a trained medical professional can see a bad turn before it turns into a catastrophe. Medicine, however, has been reluctant to intrude into homes.
One company, Health Quality Partners, has focused on doing precisely that:
The program enrolls Medicare patients with at least one chronic illness and one hospitalization in the past year. It then sends a trained nurse to see them every week, or every month, whether they're healthy or sick. It sounds simple and, in a way, it is. But simple things can be revolutionary.
The results certainly are:
According to an independent analysis by the consulting firm Mathematica, HQP has reduced hospitalizations by 33 percent and cut Medicare costs by 22 percent.
And yet Medicare is planning to shelve this pilot program, citing various bureaucratic reasons why it can't continue. Although some supporters of the home-based system maintain that it would be possible to overcome these problems, there remains a more fundamental obstacle to rolling out the Health Quality Partners approach more widely:
Hospitals make money when they do more to patients. They lose money when their beds are empty. Put simply, Health Quality Partners makes hospitals lose money.
So again we seem to be confronted by perverse incentives at the heart of our current healthcare. The better and cheaper way would mean scaling back key parts of the system by instituting regular home visits by nurses, thus reducing the number people sent into hospitals to be treated by physicians. That implies taking on very profitable and thus very powerful business interests, including the doctors themselves. Given that resistance, and Medicare's apparent reluctance to force change by backing the Health Quality Partners system, it seems likely that we will be stuck with an inferior, more costly approach to treating chronic diseases despite knowing what looks like a much better way to do it. Some might call that pretty sick.

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  1. identicon
    Anonymous Coward, 21 May 2013 @ 6:35am

    Setting the record straight.

    Actually, Obamacare makes it an even bigger road block because it makes the auditing system a ton more complex than it needs to be. Companies like HMS/Permidian already have a system in place for insurance fraud recoup and recovery that's fast, efficient, and accurate. The less the doctor incorrectly fills out insurance forms the more money he can make because he will get fined. Under Obamacare, the system is much less efficient and more complex because it covers audits for all insurance companies in stead of the ones that our tax paying goes toward...Medicare and Medicade fraud won't be checked on.

    One might think that this one size fits all deal is great, but one has to look at the full story behind the recent IRS scandal to see it doesn't work.

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