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Psst…Bezos, Dimon and Buffett: Let’s Lift the Veil on Medical Prices

This past week, we learned of a bombshell joint announcement from three significant U.S. business leaders on fixing our healthcare system: Jeff Bezos (Amazon), Jamie Dimon (JPMorgan Chase) and Warren Buffett (Berkshire Hathaway). These three individuals and organizations plan to form a new independent healthcare company for their 1.1 million employees in the U.S.  In the past, many other large business organizations have attempted to transform this healthcare system that is ripe for disruption and widely considered wasteful and inefficient. To date, however, such activity has met limited success. Conventional wisdom suggests these three behemoth companies do not have critical market power to make inroads on transforming an industry intent on gobbling up more of the U.S. economy.

So, what is different with this latest announcement? Based on this rather skinny declaration, we know very little and only time will tell.

We do know, however, this ‘new’ approach cannot happen soon enough. David Cutler, a Harvard health economist, calculated that administration accounts for nearly a quarter of the total healthcare cost in the U.S. – double the rate in the next bloated country. Karl Vick wrote quite succinctly in TIME magazine: “The U.S. healthcare system is the antithesis of Silicon Valley. Grossly inefficient and user-unfriendly, it may be the least transparent enterprise outside of the Kremlin – and just as awash in money.”

Is it possible this new coalition may propel other employers (and other payers) to band together and look for local alternatives to drive transparency in an industry that is notorious for obfuscation? The common word that is often used to change a particular industry is ‘disruption.’ Harvard professor Clayton Christensen started the Christensen Institute to address how industries can be changed (disrupted), usually through technological innovation.

The ‘pricing’ veil – A personal experience

This past December, after experiencing dizziness and double-vision, coupled with a slightly slower speech pattern, a family member was taken to an urgent care center in Mankato, MN. After undergoing a few initial tests, it was recommended the patient be transferred by ambulance to a hospital two miles away – presumably for more in-depth testing that was not available at the urgent care facility. Needless to say, this sudden turn of events was loaded with confusion over the cause of the medical problem and the impending worry.

As a patient or a family member of a patient, we seldom are prepared for what issues and challenges we face when seeking care due to a sudden medical ‘episode’ or ‘emergency.’ In fact, we typically fly by the seat of our pants when we enter the unknown world of healthcare. Even the well-intentioned medical staff are sometimes bewildered by the symptoms and possible causes of those symptoms.

Confusion reigns further when, in our case, the hospital’s electronic medical records don’t communicate with the tests previously performed at the urgent care center just 30 minutes earlier – even though both facilities are part of the same medical system! Because of this, identical tests (EKGs, blood work-up, etc.) were replicated at the hospital – unnecessary charges equating to additional costs for the payers – and increased revenue for the provider(s). I’m still working on that issue, by the way.

Thankfully, my brother and his wife were with us, which was both comforting and beneficial while attempting to discern the next course of action relating to tests and treatments. By default, we quickly assumed the role of being the ‘patient advocate’ – a daunting task.

Gratefully, the bank of medical tests found no cause for the aforementioned symptoms, although not knowing the cause remains a concern. As many of you know, the shock does not end when the patient is discharged following a litany of medical tests that occurred during a two-night stay. The second shock wave arrived a few weeks later in the form of an ambulance invoice in the snail mail and a host of ‘explanation of benefits’ found on our carrier’s website for all the other charges that occurred at the urgent care center and hospital.

The invoice for a two-mile ambulance joyride was only $1,887.79, while the urgent care facility chimed in at about $5,744.* The hospital invoice for tests and a two-night stay represented the price of a brand spanking new mid-level automobile – $24,579.40. All told, the total charges were $32,211.19, while the carrier applied their ‘network savings’ of $2,779.35.

In their recent article, “Why the U.S. Spends So Much More Than Other Nations on Health Care,” authors Austin Frakt and Aaron Carroll make the case, using a recent study in JAMA along with other research, that higher prices are the real culprit, more so than higher utilization of services by Americans when compared to residents of other countries. Yes, despite the increase in population size and the aging of U.S. citizens, health spending greatly outpaced the spending found in other countries, even after adjusting for other factors. Ashish Jha, a physician with the Harvard T.H. Chan School of Public Health is quoted in the Frakt/Carroll piece saying, “The U.S. just isn’t that different from other developed countries in how much healthcare we use. It is very different in how much we pay for it.

Why is this ‘pricing’ problem happening in the U.S., you might ask? Much of this has to do with fundamental limitations of competition in the American healthcare system. This veil of secrecy has little to no accountability on how prices are determined. Bezos, Dimon and Buffett are looking to blow up this highly-guarded industry standard. The rest of us can no longer afford to play the role of ‘innocent bystanders.’

After discussing the dearth of sensibility in healthcare pricing with a friend who works in the insurance industry, he sent me the following comical YouTube clip that cleverly attempts to address the medical price conundrum.

My recent family experience was yet another reminder that no matter our professional background, seldom are we prepared to confront the shock and confusion of the healthcare we receive…and the bills that result from that care.

The status quo in healthcare must be blown up. If existing players and stakeholders resist being part of real solutions, then the eventual sea change will sweep them into a new reality that may be difficult to survive.

As ‘real’ payers of healthcare, maybe employers can become the change they wish to see in the healthcare industry. After all, sometimes business interests can align with those of humans.

But only time will tell.

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*Some billing discrepancies remain while attempting to discern a number of charges found on Mayo’s list billing with what was paid by my insurance carrier.  The list-billing from Mayo, I’m convinced, was clearly not meant to be a consumer-friendly document.

Supporting a State-Based Mandate for Health Insurance – A Bi-Partisan Approach

Supporting a State-Based Mandate for Health Insurance - A Bi-Partisan ApproachEvery now and then, I will read something relating to healthcare policy that makes some sense to me, regardless of the writer’s political perspective. I don’t spend much time writing about healthcare policy issues, primarily because the politics of enacting anything that makes sense is, at best, a crapshoot, and, at worst, a waste of my time – and yours! I’ll leave this discussion to the ‘policy wonks.’ Additionally, the legacy lobbyists are thick in Washington and state houses determined to control the process of what eventually becomes policy – usually for the betterment of their own interests. They also have a stockpile of financial resources to ensure their insulated world does not become too disrupted anytime soon.

There, I said it.

The new tax law ends Obamacare’s requirement that nearly all Americans purchase health insurance coverage or pay a fine. With this, I do expect to see some states search for ways to shore up their individual health insurance markets by passing their own state-level mandates to keep many of their residents insured. In addition to Massachusetts’ mandate dating back to 2006, other states such as California, Washington, Maryland, and the District of Columbia may take measures to pursue their own specific mandates.

In the December 28 ‘Editorial Counterpoint’ found in the StarTribune, Minnesota state senator (and physician), Scott Jensen, a Republican from Chaska, wrote a piece, ‘Why we should start talking about a state mandate.’ Jensen suggests that Minnesota-elected leaders begin discussion on establishing a state mandate for individual healthcare insurance coverage – because it is the right thing to do. Jensen does a wonderful job of reaching across the aisle to do something they were elected to do.

I particularly appreciate the bipartisanship approach Jensen gives to this discussion – which is a great way to begin 2018. Instead of paraphrasing his editorial, I have included the entire article. By the way, for those of us from Iowa, just insert ‘Iowa’ whenever you see ‘Minnesota’ – including references to the Governor. Do I advocate that Iowa embrace all of the specifics as described by this elected MN official? Not necessarily. But I do support his attempt to find common ground on a topic that has become too polarized and unsustainable for most every state.

Scott Jensen’s Editorial

Helping someone at the scene of a recent auto accident sparked in me a resolve to publicly address health care costs and universal critical care coverage. I firmly believe Minnesotans want their elected leaders to stop drawing lines in the sand, stop the partisan quibbling, redouble their efforts to get something done with the health care crisis and do it in the coming 2018 session.

I have been asked if I would support a discussion regarding a state-based mandate for health care (“After lost mandate, what’s next for care?” editorial, Dec. 24). Yes, I would engage such a conversation — why wouldn’t I? Health care is infected with big problems, and easy solutions are not looming on the horizon. Legislators are in no position to close their minds to an idea that has received support from both sides of the aisle over the last 30 years.

In 1989, an individual mandate to purchase health care insurance was championed by the politically conservative Heritage Foundation when Stuart Butler wrote: “If a young man wrecks his Porsche and has not had the foresight to obtain insurance, we may commiserate, but society feels no obligation to repair his car. But health care is different. If a man is struck down by a heart attack in the street, Americans will care for him whether or not he has insurance.”

An individual mandate resonates with conservative principles of personal responsibility, and comparisons are often made to similar requirements for auto insurance. But it is crucial to realize that an individual mandate requiring insurance companies to include too many “essential” benefits will likely sabotage the affordability and sustainability of such a mandate. Patients are capable of championing their own health care, and they should be allowed to choose what they want to buy. Teetotalers should not be forced to buy inpatient chemical dependency coverage, and seniors may want to invest their dollars on maladies of aging rather than prenatal care. Choice matters!

Public and private entities have both indicated strong support for a health care insurance mandate. Brainstorming and discussion may help create a blueprint for catastrophic coverage for such essentials as hospitalization, access to generic and select trade name medications, emergency room visits for true emergencies and mental health problems. (Please trust my 30 years in the trenches on at least this one point — no one knows when a mental health crisis might occur, so coverage of some sort is indeed essential.)

Let’s not forget that Medicare started in 1965 as a limited part A hospital-only plan and it grew thereafter. We can take a lesson from this initiative. Just because we can’t do everything doesn’t mean we shouldn’t do something. Indeed, we should do it now.
As a starting point, maybe everyone can agree that people should not die on the streets from heart attacks — but also that not every wart, runny nose or incidental hernia needs to be paid for by a third party.

But a mandate for health insurance is just one idea needing to be explored in the coming months, and individual coverage is not the only sector of the insurance marketplace clamoring for attention. Employer-based insurance is experiencing its own escalating affordability crisis. Some earnest soul-searching needs to happen at the Capitol — soon!

The Senate Select Committee on Health Care Consumer Access and Affordability has deliberated on numerous cost-reduction issues, including pharmaceutical prices, narrow networks, transparency of fees, low-value services, end-of-life decisions and protecting patient-doctor relationships.

As elected leaders, we need to roll up our sleeves and get the job done. If we don’t, we will have failed our constituents.

Hospitals all over the state are in trouble financially because too many bills go unpaid and charity care is crippling their ability to respond to community needs.

Parents and patients are being forced to make impossible choices as to whether critical medical care for their children or themselves should be subordinated to paying bills or house payments — a health crisis should not invoke fear of bankruptcy or a second mortgage.

Home health aides work for $12 per hour with no benefits, and the shortage of these compassionate servants intensifies while the sick and infirm pray for help and a bath.

The time has come for statesmanship — and this will require attention to patient choice, unintended consequences, sustainability, representation from both parties, civil tongues, and a passion for what best serves our state, our nation and the common good.

(Maybe now is the time for Gov. Mark Dayton to take the lead and host a breakfast with Senate and House leaders from both sides of the aisle to determine the level of resolve for addressing our health care crises in 2018. I suspect such a meeting would be more fruitful if cellphones, egos and sound bites are checked at the door.)

Final Comment

The best way to help individuals buy health insurance is to find ways to reduce the cost of it, such as disrupting how healthcare is both delivered and paid. This will require consensus from both sides of the aisle and willing stakeholders to disrupt the status quo.

In the meantime, we can periodically learn from our neighbors to the north.

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Was Grandma Ahead of Her Time?

It’s early Friday morning, a day that marks the beginning of a long holiday weekend, which will culminate on Monday – Christmas Day. In my office, I’ve just poured my third cup of java and started perusing newly-arrived emails from last night and this morning. One particular email caught my eye and I naturally opened it to learn more.

The content was about…coffee.

Grandma and Coffee

The aroma and taste of coffee, at least for me, became an acquired and ‘necessary’ habit over the years, beginning while I was in college. Late night cramming required that I not doze during the precious remaining critical hours prior to the exams. Caffeinated coffee became my best late-night friend.

The origin of my eventual coffee ‘addiction’ can be traced back to my grandparent’s farm – an acreage north of Detroit Lakes, MN. During the summer months in the late 1960s, my siblings and I would have the opportunity to spend time at the farm helping with chores and experience rural living – working in the garden, hitching a ride on a tractor, playing by the slough, and enjoying some of the best home-grown beef and vegetables at dinner. Without a doubt, the time spent on the farm provided some of my best childhood memories!

To begin their day, I noticed that my grandparents enjoyed a hot beverage that was prepared on their wood-burning stove. While percolating, the aroma of the black brew seemed somewhat odd to me, but my grandparents relished the benefits coffee provided to them when beginning their day. As an impressionable boy, I remember asking Grandma if I could have a sip of this ‘black magic,’ and she, very prudently, complied. I remember her telling me, “Someday, you may like the taste of this, David!” The taste, I quickly learned, was not what I had expected, and that was my first and last sip of coffee – until my college days.

Recent Findings about Coffee

The email I received about coffee came from Harvard T.H. Chan School of Public Health. According to a study recently published by Harvard, people with colorectal cancer (CRC) who drank at least four cups of coffee per day after their diagnosis had a ‘significantly lower’ risk of early death – either from this cancer or any cause – than those who didn’t drink coffee. According to the American Cancer Society, CRC is the second-leading cause of cancer in the U.S.

Just four days earlier, I had successfully completed my fourth colonoscopy since 2003. Needless to say, I instinctively poured myself another cup of java and continued reading.

Previous evidence suggested that coffee may help lower the risk of mortality, in addition to several chronic diseases, possibly due to its ability to fight inflammation and insulin resistance. Coffee contains anti-carcinogenic compounds that can benefit us in other ways. Although this newest finding cannot claim causality between drinking coffee and reduced mortality risk, the findings are nevertheless encouraging and are worth further exploration.

My grandparents have long since passed away, but what they shared with their grandson some 50 years ago continues to add to the priceless memories I have of them today. Without realizing it, perhaps grandma was ahead of her time regarding coffee’s taste and health benefits!

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