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How the Health Care Industry Promises to Save You Money

Remember that coalition of health industry stakeholders who came together to promise President Barack Obama $2 trillion in voluntarily achieved savings over 10 years? They've released their specifics (pdf). It's a bit hard to say what the numbers would add up to if scored by an independent analyst, but the overall effect was to make me much, much less sympathetic to the health industry.

The insurance industry, for instance, is promising to address the fact that "there is currently a lack of uniformity for providers who face administrative challenges created by having business contracts with multiple health insurance plans, each with different telephone numbers, codes, fax numbers, and varying forms and administrative processes." Why this wasn't dealt with 10 years ago is hard to say.

The American Hospital Association wants to "promote adoption of the World Health Organization (WHO) Surgical Safety Checklist." This is literally a checklist in which, for instance, the surgeon, anesthesiologist, and nurse verbally confirm the name of the patient and the location of the surgery. Simple as it sounds, it's been proven to save lives. Lots of them. And yet it's not in wide use.

Advamed, which represents the medical device industry, will "organize our industry sectors to assure full input of our scientific and medical knowledge and expertise in measurement development for device-intensive procedures." And how, pray tell, are your industry sectors organized now?

Importantly, I'm not down on this initiative. Some of these measures might really save money. Almost all of them would make the health system sleeker, more effective, and more user-friendly. Implement these ideas! Do it now! But the fact that there is this much low-hanging fruit is troubling. But in the aggregate, the document paints the picture of an almost comically ineffective sector. This isn't just a blueprint for reform. It's an argument for reform. And above that, it's an argument for why reform should not be overly constrained by the preferences of the stakeholders. Look at the system they've built. Look at the inefficiencies they've permitted. They don't deserve a guiding role.

By Ezra Klein  |  June 2, 2009; 10:30 AM ET
Categories:  Health Reform  
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""there is currently a lack of uniformity for providers who face administrative challenges created by having business contracts with multiple health insurance plans, each with different telephone numbers, codes, fax numbers, and varying forms and administrative processes." Why this wasn't dealt with 10 years ago is hard to say..."

They tried. HIPAA was, in addition to a privacy act (and much more so, really), a movement to standardize electronic transactions (member eligibility, claim status, claim filing, etc) so that paperwork would disappear and that every doctors office would be able to use one web portal or software device to do their business with every payer. More money was spent on this than on Y2K compliance. The dream was to have it be like an ATM. Remember when ATM’s first came out (though you’re a young whippersnapper, so maybe not) and you could only use your bank’s ATM? Though, eventually, you became able to use any ATM (though potentially with a fee)? That’s because all ATM’s were standardized to speak the same electronic language. The healthcare industry was using the same standard setting agency (ANSI) to do just that.

Obviously the standardization didn’t happen.

Things did get sort of better and there was a massive migration to electronic means, and, yes, things were technically standardized. But really, the dream was for every provider to have one software/portal that did all their transactions and it’s more like 2-5 software/portals and still some paper claim hold outs. Some regional electronic clearinghouses aggregate several payers into one electronic dashboard (for a fee usually, or subsidized by payers/providers), but it’s patchwork across the US.

That said, this is huge. At the time we all knew HIPAA II (as we were calling it) would come one day to clean up the mistakes of the first HIPAA. Dr. Bill Braithwaite was the real bioinformatics pimp behind this. His paper “Claims at 1/100th the Cost” is a great intro, though I can’t find it online. Donna Shalala wrote the act, he wrote the regulation behind the transaction/codeset piece if I recall.

Posted by: ThomasEN | June 2, 2009 11:01 AM | Report abuse

The health care 'industry' (picture a manufacturing biz before Henry Ford's day) is the secret half-brother (same father, two different but simultaneous 'wifes') of the financial services 'industry'. Both spend all their time scheming to satisfy their greed (personal and organizational) under the banner of 'innovation' - that they say would be aborted by any regulation whatsoever. One of their favorite mantras is 'self-regulation' will be more effective and efficient.

It took a lot of political horsepower in the first progressive era to achieve some degree of citizen/purchaser regulatory oversight (and trust busting of the monopolists/oligopolists). Teddy Roosevelt (and later FDR in the New Deal) knew that these folks had to be broken, not brought into legislative den when bills were being crafted.

Now, the biz folks completely control the US capitol and the executive branch. As some truth-sayers in congress have been saying: they own this place. Obama and team don't have the inclination to win and the drive to make it happen. The 'game' will go on, so just move along, there's nothing happening here.

Posted by: JimPortlandOR | June 2, 2009 11:01 AM | Report abuse

Among these other ideas, can we please simply force med schools to train more doctors? I don't see the harm to anybody except Porche.

Posted by: Wyatt_Earl | June 2, 2009 11:56 AM | Report abuse

This is so nice. The day of the announcement we received an 8% increase in our medical insurance. Insurance is now our major monthly expense by far. Meanwhile my work load has dropped 50%. Just who do they think they are fooling

Posted by: beboyd1 | June 2, 2009 12:21 PM | Report abuse

For healthcare reform to work, these industries all have to agree to give up some piece of their income. The only spot in the letter where I see a willingness to do this is the AMA's Efforts to Reduce Unnecessary Untilization. Reducing the number of back surgeries, elective C-sections, and MRIs will reduce some doctors' incomes.

Posted by: Liz_B | June 2, 2009 1:12 PM | Report abuse

If you read the letter closely, it's evident that several of the stakeholders have already been working on these initiatives for some time now. Examples are the CAQH CORE initiative and the AMA's Physician Consortium for Performance Improvement, which is working on reducing unnecessary utilization (which was a central focus of Dr. Gawande's recent article).

Some of the stakeholders rightly ought to be criticized for coming up with ideas that sound really good, but essentially mean nothing in the real world and will lead to no quantifiable savings. For example, in addition to AdvaMed, look at one of the things that the AHA proposes -- to reduce the incidence of certain adverse events. However, in the Medicare program, currently CMS no longer reimburses hospitals for the higher DRG for several of these events -- PLUS several more.

The AHA doesn't say that it won't charge or bill the patient or private payer if these events occur; they're just going to try to reduce the incidence of the events, with no detailed plans on how to do so. If the AHA agreed that hospitals should not charge, then there'd be some real cost savings, but otherwise this is meaningless fluff and window dressing. It's even less of a commitment than several state hospital associations have already made in deciding not to charge patients and private payers for medical services incident to adverse events. The AHA needs to put some skin in this game.

Posted by: Policywonk14 | June 2, 2009 3:05 PM | Report abuse

Here's a quick math question.
The HC Coalition are going to fleece the American public of $8 trillion in the next 10 years for profits and unnecessary overhead. They're proposing to forgo $1- maybe $2 trillion. How many trillions will Americans lose? The answer is____

I detest using the word "health" before "insurer" because the evidence is that their business model is dependent upon denying healthcare, nor providing healthcare.

We have rigged a system where the thieves can legally steal by bribing elected officials to write laws making their type of theft legal. To add salt to the wound, the thieves are allowed to account for the cost of the bribes as a tax free business expense.

About 27 cents of every healthcare dollar goes to profits, overhead and staff whose job is to deny healthcare. 1.5-2 cents goes to malpractice. Why do we hear more about malpractice than profits, overhead and coverage denial?

Posted by: boscobobb | June 2, 2009 7:38 PM | Report abuse

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