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Explore This IssueApril 2013
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The late night comedian Bill Maher ends his weekly shows with a segment called, “New Rules.”1 These consist of a series of Maher’s opinions and commentaries on current events—some erudite, others caustic or a tad obscene. Though they are written to generate laughter, many of these rules belie a deeper analysis of some complex issues. In homage to Maher, here is my version of some new rules for our ever-changing world of healthcare.
New Rule: Let’s Get Rid of Hospital Sticker Shock
Have you ever tried to decipher a medical bill? It might be easier to break the encryption codes used by the Allies during World War II. Using sleight of hand and some clever math (where numbers can be added but never subtracted), hospitals deliberately obscure the true cost of tests and procedures. With the anticipated major redesign of healthcare delivery, it is time for hospitals to wake up to the realities of the 21st century. Comparing prices for medical procedures is impossible because there is no transparency about cost. As Professor Uwe Reinhardt, a noted healthcare economist at Princeton University in New Jersey, observed, the pricing of hospital services is best described as “chaos behind a veil of secrecy.” Descriptors are often inaccurate and the charges can be mind boggling. For example, I have seen up to four separate charges listed for a single corticosteroid joint injection, including the professional fee, a facility fee, a technical charge, and the medication cost. A recent cover story in Time magazine depicts many egregious examples of price gouging in painstaking detail.2
Researchers from the University of Iowa in Iowa City highlighted the difficulty encountered when patients attempt to compare hospital charges for procedures.3 Using a standardized script, they surveyed more than 100 hospitals nationally and requested from each hospital the lowest complete “bundled price” (hospital cost plus physician fees) for an elective total hip arthroplasty for a 62-year-old, otherwise healthy woman. In this scenario, the patient did not have health insurance but had the means to pay costs out of pocket and was seeking the lowest complete price for the procedure. The question seemed fair enough. Isn’t this the way we shop for cars, computers, and cell phones? Shouldn’t medical shopping be the same? Get several price quotes, investigate those facilities that seem most capable of providing quality care, and book an appointment to meet with the team. You are probably not surprised to learn that the authors struggled to get price information for the procedure and what they observed was an 11-fold variation in the prices that were quoted. They ranged from a low of $11,000 to over $125,000! By comparison, Medicare and other large insurance payers usually pay hospitals between $10,000 and $25,000 for primary joint-replacement surgery.
Perhaps the time has come for hospitals and providers to post the equivalent of a “Monroney sticker,” those automobile windshield stickers that list the manufacturer’s suggested retail price, the standard and optional equipment, and car warranty information. We can thank the late Senator from Oklahoma, Almer Stillwell Monroney, who spearheaded the passage of the Automobile Disclosure Act through Congress in 1958. Why not make shopping for a new knee as easy as buying a new Nissan?
New Rule: Even Baseball Has Salary Caps, So Why Don’t Nonprofit Hospitals?
For those of us who toil in healthcare facilities that are considered to be nonprofit institutions, consider this fact: your compensation is likely constrained to some degree by the “not-for-profit” connotation. This explanation is often used to justify why physician salaries need to be kept in check, but oddly, it does not seem to apply to our hospitals’ top executives. Despite its charitable-sounding name, a nonprofit organization is not precluded from making a profit or engaging in profit-making activities. However, a nonprofit institution is prohibited from passing along any profits to those individuals who control them, such as founders, directors, officers, key employees, and members. Yet there is no rule preventing the institution from lavishly compensating its senior executives. A 2010 survey of the compensation given to the 10 highest-paid executives of nonprofit hospitals found their aggregate payroll exceeded $40 million.4 Though this amount may be dwarfed by the salaries of most professional sports teams and by Wall Street bankers, it’s still quite the tidy sum.
Exorbitant salaries are not restricted to executives of large, urban teaching hospitals. This pay scale is mimicked, albeit at a reduced scale, in small cities and towns across the nation. As the investigative reporter Steven Brill observed in his scathing assessment of the healthcare industry, “the American healthcare market has transformed tax-exempt ‘nonprofit’ hospitals into the towns’ most profitable businesses and largest employers, often presided over by the regions’ most richly compensated executives.”2
How do these executives’ salaries compare to the compensation of their peers working in other nonprofit sectors of healthcare and education? Surveys suggest that the deans of most U.S. medical schools and the majority of university presidents earn about 40% to 60% less income than hospital executives. I understand the need to recruit top-flight candidates to run complex hospital systems, but somehow, our wonderful medical schools and universities seem capable of filling leadership positions with excellent candidates, all at a fraction of the cost that their sister hospitals spend. Health executives, heal thyselves. Since most of you are medical doctors, you should be able to come up with a cure.
My aversion to faxes might be traced to fact that they serve as the primary mode of delivery for the dreaded prior authorization forms required for a growing list of drugs.
New Rules: Sometimes It’s Just Better To Leave Well Enough Alone
The late Robert K. Merton (1910–2003) was a distinguished sociologist who spent most of his career working at Columbia University in New York City. He is best remembered for his contributions to the nascent field of the sociology of science. Among the notable concepts that Merton developed are the ideas of self-fulfilling prophecies and the description of the unanticipated consequences of social action. The latter phenomenon best describes the outcome of a recent income redistribution experiment gone awry.
In 2010, the Centers for Medicare and Medicaid Services (CMS) instituted a targeted policy to redistribute Medicare payments from specialists to primary care physicians (PCPs) in a supposedly budget-neutral manner. Specifically, CMS eliminated payments for the higher-compensated consultations from the Medicare Physician Fee Schedule, which were billed more frequently by specialists, and raised the fees for office visits, which were billed more frequently by PCPs. New office visits (such as codes 99203 and 99204) largely replaced consultations (codes 99243 and 99244). Since each office visit charge was reimbursed at a lower rate than the corresponding consultation charge, the expectation was that the redistribution of payments would result in a net loss of income for specialists, even though the payment for office charges was raised slightly. Paradoxically, Medicare ended up spending an average of $10.20 more per beneficiary per quarter for all physician encounters, a 6.5% increase.5 Why? The total volume of physician encounters did not significantly change. Instead, the increase in spending was largely explained by the higher office-visit fees set by this new policy and especially because of a shift toward higher-complexity visits that were billed more frequently by specialists and PCPs. Paradoxically, the elimination of the more costly consultation codes resulted in a net increase in spending on visits to both PCPs and specialists. When it comes to medical economics, you don’t need to be a Nobel Prize–winning economist like Robert C. Merton, the son of Robert G. Merton, to devise strategies to offset a possible loss of income.
New Rule: Let’s Pretend We Are Actually Working in the 21st Century
Sending out a prescription requires most of us to travel back in time. Specifically, back to the 1980s, when cordless phones were still cool (watch any Seinfeld episode) and the idea of the Internet was just a thought percolating through the mind of Al Gore. Faxes ruled the business world; after all, they were considered a marvelous invention for the time. Computer technology was still in its infancy. For example, in 1980, an IBM mainframe computer with 20 gigabytes memory weighed more than two tons and cost over $700,000. Today, most standard laptops cost under $1,000, weigh about three pounds, and offer at least 500 gigabytes of memory.
Despite all the advancements in technology, medicine still relies on the fax machine for a variety of information transfers, even though faxes are wasteful, inefficient, and very unfriendly to the environment. No matter that faxed data cannot be readily converted into digital formats. Let’s not emulate Japan, where, according to a recent article in the New York Times, population demographics have left that country dominated by older generations who are still more likely to have fax machines than e-mail addresses.6
My aversion to faxes might be traced to fact that they serve as the primary mode of delivery for the dreaded prior authorization (PA) forms required for a growing list of drugs. I understand the necessity of obtaining a PA for costly drugs. But what is the justification for using them to block prescriptions for inexpensive generic drugs such as omeprazole, alendronate, nifedipine, folic acid, and even prednisone.
These are just some of the drugs whose access has been blocked by various pharmaceutical plans in the past year. They are cheap, generally costing $100 or far less for a 90-day supply. I doubt that pharmacy benefit managers fret about wasting our time, but perhaps healthcare regulators should. For physicians, the prior authorization process probably creates more angst and dissatisfaction with our healthcare system than just about any other activity we are required to perform. When doctors cite the reasons for professional burnout, this one is near the top of everyone’s list. What would happen if we disconnected our fax machines for a couple of days? A greener environment and a happier office staff, no doubt.
New Rule: Let’s Pass on Producing Periodic Password Permutations
It’s been a mere 10 weeks since I was last required to change my hospital network password. Today, the not-so-subtle reminders started popping up on my computer screen. Literally every login attempt was greeted with a prompt to change my password again. There was a time when password changes were required annually. Eventually this requirement morphed into a semi-annual event, and now it has become quarterly. It’s as though my password is in some form of a witness protection program, constantly required to shed its identity and assume a new disguise.
Does it make my hospital network safer and impervious to hacking? Apparently not, according to a paper written by two computer scientists working at Microsoft.7 They carefully analyzed the password policies of 75 major websites, including universities, banks, brokerages, and government sites. The size of the site, the number of user accounts, and the value of the resources protected all correlated very poorly with the strength required by the site. Some of the largest, highest-value, and most-attacked sites on the Internet—such as Paypal, Amazon, and Fidelity Investments—allow relatively weak passwords. The scientists observed that sites that accept advertising, have a revenue opportunity per login, purchase adwords, or where the user has choice tend to have less restrictive policies. They concluded that the sites with the most restrictive password policies do not have greater security concerns; they are simply better insulated from the consequences of poor usability. Online retailers and sites that sell advertising must compete vigorously for users and traffic. In contrast to government and university sites, poor usability is a luxury they cannot afford. This, in turn, suggests that much of the extra strength demanded by the more restrictive policies is superfluous: it causes considerable inconvenience for negligible security improvement.
It seems to me that hospital information technology departments are conflating password security with file encryption. Computer encryption is very important because, without this feature, lost or stolen laptops or other mobile devices become highly vulnerable portals of entry into a network. In terms of network safety, encryption is a totally separate issue from the ill-conceived policy mandating new passwords every 2,000 hours. New passwords don’t enhance safety. They just give the false impression that they do, similar to the futility of frisking elderly, wheelchair-bound airline passengers waiting to board their planes. I decided to seek the opinions about password safety from my hospital’s two chief information officers. Neither has responded to my e-mail queries. Was this a deliberate act of avoidance or did they not receive my e-mails in the first place? Maybe I ought to send them each a fax.
Dr. Helfgott is physician editor of The Rheumatologist and associate professor of medicine in the division of rheumatology, immunology, and allergy at Harvard Medical School in Boston.
- Maher B. New Rules for the New Year. New York Times, January 6, 2013; p. SR5. Available at www.nytimes.com/2013/01/06/opinion/sunday/new-rules-for-the-new-year.html?_r=0. Accessed March 13, 2013.
- Brill S. Bitter Pill: Why medical bills are killing us. Time Magazine, March 4, 2013. http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us. Accessed March 13, 2013.
- Rosenthal JA, Lu X, Cram P. Availability of consumer prices from US hospitals for a common surgical procedure. JAMA Intern Med. 2013; Feb 11. [Epub ahead of print]
- Herman B. CEO compensation of the 25 top-grossing non-profit hospitals. Becker’s Hospital Review. September 26, 2012. Available at www.beckershospitalreview.com/compensation-issues/ceo-compensation-of-the-25-top-grossing-non-profit-hospitals/print.html. Accessed March 13, 2013.
- Song Z, Ayanian JZ, Wallace J, et al. Unintended consequences of eliminating Medicare payments for consultations. JAMA Intern Med. 2013;173:15-21.
- Fackler M. In Japan, the fax machine is anything but a relic. New York Times. Feb. 14, 2013; p. A1. Available at www.nytimes.com/2013/02/14/world/asia/in-japan-the-fax-machine-is-anything-but-a-relic.html. Accessed March 13, 2013.
- Florencio D, Herley C. Where do security policies come from? Symposium on Usable Privacy and Security (SOUPS) 2010. July 14–16, 2010, Redmond, WA. Available at http://research.microsoft.com/pubs/132623/WhereDoSecurityPoliciesComeFrom.pdf. Accessed March 13, 2013.