Hidden Costs of Health Care

July 25, 2014

CHW LogoMy father (who was a cost accountant for a big pharmaceutical firm), used to say “If you think medicine is expensive, consider the alternative.”  Although we didn’t use the term “value” much in the context of health care back then, I think he was trying to get at that concept.  The real question isn’t the cost, it’s what are you getting for it.

Our awareness of the importance of the cost part of the value equation has outpaced our ability to measure the cost.  Oh, we’re getting quite good at determining the cost from the perspective of the provider and the payer.  We talk about fixed vs. variable costs, and direct vs. indirect costs.  While health care costing is complex, there are some very sophisticated systems for measuring those components.  When someone wants to know why a hospital charges $8 for an aspirin that can be purchased at Walgreen’s for $0.03 (as an aside, notice how keyboards no longer have the ₵ symbol?), we can explain that the price includes not only the direct cost of the materials, but also the indirect costs for handling, storage, documentation, administration, etc., much of which is mandated by regulations.  People may still feel the price is ridiculous, but at least it’s understandable.

This works if we’re trying to calculate the value of health care services to the individual who is paying.  It doesn’t work when we determine the value of health care to society.  A basic tenet of health economics is that any cost-effectiveness (i.e., value) analysis must specify the perspective of the analysis.  Much of what we do, especially at the more expensive academic health centers, benefits society as a whole.  But in addition, much of what we do also has costs to society that go beyond what typical cost accounting measures.  There are a host of what economists term “externalities” – essentially, unaccounted for costs.

Charles Bitmann illustrates this concept in a New York Times article called “The True Cost of a Cheeseburger.”  The price of a burger includes direct costs (e.g., ingredients, labor for preparing and serving) and indirect costs (e.g., rent and utilities for the restaurant, advertising), and of course a profit for the vendor.  Among the externalities, however, are things like the maintenance of the highway system used to transport the ingredients, and the cost of caring for illnesses that may be the result of consuming too many burgers.  Because these costs are not incurred by the restaurant owner, they aren’t included in the price.  But someone has to bear those costs.  Most often, they are spread out across society at large.  In the context of a for-profit business, ignoring externalities inflates the profit by passing on the costs to someone else.  Bitmann’s calculation is that the true cost of a cheeseburger would be 15-50% higher if these costs were accounted for.

In the context of health care, there are other implications.  First, in the debate over the cost of medical care to society, things may be even worse than we believe.  Instead of 17% of GDP being spent on health care, it would be substantially higher.  Second, our mission is not to make a profit.  It is to heal people or keep them well, to improve the health of society.  Some of the externalities we ignore may have the opposite effect.  While undoubtedly there are many such externalities applicable to health care, I want to consider two.

The first is the cost of our environmental impact.  Hospitals are among the most energy intense buildings around.  Our carbon footprint is enormous.  There are highly variable estimates of the cost of controlling carbon emissions and dealing with the related climate changes, but they run into the many trillions.  In the current state, those doing the emitting do not bear any of those costs.  (This could, of course, change if there were a carbon fee or tax, but that’s unlikely in the US any time soon.)  At the Milwaukee Regional Medical Center, our heat and cooling come from a coal-fired thermal plant.  This will eventually be converted to natural gas, which has about half the carbon emissions, but they are still substantial.  Since there is no cost to the hospital for those emissions, there is no financial incentive to do something to eliminate them (e.g., geothermal).  But should we be looking more broadly at the cost to society, from an economic perspective?  Or the health impact, from a moral perspective?  Some health systems, notably Gundersen Lutheran in La Crosse, WI, have done so in a big way.

The second externality is lost productivity to patients and families due to unnecessary waiting.  I have never seen anything about this in print.  But the amount of time people spend waiting in our facilities is simply extraordinary.  Societal-perspective economic analyses typically include an estimate of the monetary value of lost time.  Imagine what the cost of an ER visit would look like if it included not only the usual direct and indirect costs, but also the 120 minutes of lost work for the parents?

Research, education, public health, preventive care: these are an important part of the quality part of the value equation.  Payers, policy makers, and individuals need to be reminded that when they think about what health care costs, this is part of what they are getting in return.  We, in turn, need to be mindful that we actually cost even more than we know.  As my father might have said, “If you think medicine is expensive, it’s worse than you thought.”

Less is Less

July 17, 2014

CHW LogoA few months ago in the emergency department, I saw a child who had been getting only half as many puffs of their asthma controller medication as prescribed.  The mother, hoping to make the $185 inhaler last longer, figured some medicine was better than none.  For many people, living on the financial edge, life is a series of trade-offs – medicine vs food vs clothing vs transportation – that most of us are completely unfamiliar with.

Health insurance is supposed to minimize the need to include medical care as part of that zero-sum equation.  The Affordable Care Act, by expanding coverage, should therefore increase access to care.  But one of the changes that has accompanied the ACA is a huge increase in cost-sharing, not just for people covered by policies acquired through the ACA, but for everyone.  Over 20% of all health plans now are high deductible plans, and they are growing far faster than any other type of coverage.  We are now starting to see some of the effects of this shift of financial responsibility for health costs away from insurers and toward patients.  Back in the 1970s, the RAND Health Insurance Experiment randomized people to high vs. low deductible plans.  Their main findings were that those who had to pay higher out-of-pocket costs used less medical services, both necessary and unnecessary, and that overall there was no demonstrable difference in health outcomes.  Many have since latched onto this as evidence that cost sharing can decrease spending without harming health.  But dig into the details and you’d see that among those people with lower incomes and poorer health to start with, there were adverse effects of greater cost sharing (specifically, higher mortality among those with hypertension).

In the July issue of JAMA Pediatrics, researchers from Boston report on the effect of cost sharing on children with asthma.  Similar to the RAND study, forgoing needed care (including medications and emergency department visits) was more common among those families with higher cost sharing who were also below 250% of the federal poverty level.  Moreover, such families reported worse asthma control.  They also were more likely to have to borrow money (33.3%) or defer other necessities (17.6%) than families who either had less cost sharing in their health insurance, or higher family income.

At present, children covered under Medicaid have very little cost sharing.  Indeed, in the JAMA Pediatrics study, children covered by Medicaid fared reasonably well.  However, those families who have employer-provided insurance, or those obtaining coverage via the public exchanges, may well fall into that combination of modest income and high cost sharing that leads to forgoing needed care for their children.  We as health care providers need to be aware of the kinds of Sophie’s choices they are faced with.  How can we support them?  We can ask them if they are having trouble making ends meet, if they are having to trade off food for medication.  We can be sensitive to the cost of the care we provide, and consider less expensive alternatives when appropriate.  And we can be non-judgmental when we find out they missed a clinic visit, or didn’t refill a prescription.  Instead, we can be curious.

Recharging the Batteries

July 3, 2014

CHW LogoJuly 1 is the traditional start of the medical academic year.  The hallways are bustling with eager, young (and getting younger each year) physicians with seemingly limitless enthusiasm.  Yet by the end of the year, surveys show that at least half of them will have some signs of burnout.  This is not unique to health care. A 2013 Gallup study found that just 30% of American workers are engaged at work.  This is remarkably consistent across sectors of the economy (health care is actually at the higher end, with 34% of physicians and 33% of nurses engaged), and is a figure that compares favorably with the global average of 13%.

The usual leading suspect is lack of work-life balance.  But that is only a part of the picture. Research shows that there are four core needs that, if met, contribute to a feeling of satisfaction and engagement (or burnout, when these needs are not met):

  • Physical – opportunities to regularly refresh and renew at work (e.g., taking breaks) and away from work
  • (work-life balance)
  • Emotional – feeling valued and appreciated for one’s contributions
  • Mental – ability to focus in an absorbed way on the most important tasks, and determining when, where, and how to get the work done
  • Spiritual – doing what you do best and enjoy most, and feeling connected to a higher purpose at work

A survey of over 12,000 workers (95% of them “white collar”) showed that of these, it was the ability to focus and to think creatively that was most often felt to be missing.  A sense of meaning or significance to one’s work, and doing what is most enjoyed, were also lacking.  I suspect that part of why health care professionals are somewhat more engaged than others is the strong sense of mission we have and share with the organization as a whole.  We all want to feel that what we do is important, enjoyable, and appreciated.  I am very fortunate that, for most of my career, I have been in jobs that are exactly that.

Satisfaction is more a function of the organization than of the industry.  A common thread among those organizations with a highly engaged and satisfied workforce is certain characteristics of leaders: personal energy level, showing appreciation, and leading by example when it comes to creating focus and renewal.

Hoping to cast a positive shadow of leadership, I am getting ready to renew myself physically and mentally on a family vacation.  No email, no work reading, and no blog next week.

Group of Death

June 27, 2014

CHW LogoSo, the US lost to Germany, but still managed to advance out of the “Group of Death” in the World Cup by ending up above Portugal.  Lots of cheering and patriotic pride.  But right after the Facebook post of the photo of the American team and their fans celebrating were two other links that were rather sobering.

The first was the result of the latest Commonwealth Fund study showing that, once again, the US ranks dead last in health system performance among 11 advanced countries studied.  We’ve been in that position since the Fund first started doing these analyses in 2004.  Britain, Switzerland, and Sweden ranked first through third, respectively, on overall performance.  The highest score for the US was a 3 in “effective care.”  Interestingly, we ranked 5th in “timeliness of care,” while Britain, with its much-maligned (at least in the American press) National Health System, ranked 2nd in this measure of quality.  For access, efficiency, healthy lives (e.g., life expectancy), and equity – the US is right at the bottom.

Within our own country, the news for those of us here in Wisconsin was worse.  The Annie E. Casey Foundation released a report, “Race for Results: Building a Path to Opportunity for All Children,” on disparities in the US.  Based on an analysis of 12 different factors including educational attainment, socioeconomic status, and home life, Wisconsin was ranked the worst state in the nation for black children, and the state with the greatest disparities.  A few key data points:

  • 77% of black children in Wisconsin (and 67% of Latino children) live in a household under 200% of the federal poverty level, compared with 29% of non-Latino whites
  • Wisconsin scored lowest of all states (238) on its ability to prepare black children for educational and financial success; the average score was 345, while Hawaii had the highest score, 583. (WY, ID, VT, and MT, with very small African-American populations, did not have sufficient data for analysis.)  At the same time, Wisconsin was ranked 10th overall in its preparation for white children.

Knowing that socioeconomic and environmental factors are key determinants of overall health, these findings help explain some of the known racial disparities in health in our state.

Our vision for Children’s Hospital of Wisconsin is that the children of Wisconsin will be the healthiest in the nation.  Not only are we far from it, but even when we get there, is that enough?  Our health system doesn’t seem to be performing even as well as our soccer team.  According to the WHO ranking of all 191 nations, the US (at #37) is well behind Portugal (#12).  So much for making it out of the Group of Death.

Google says…  

June 20, 2014

CHW LogoWhen I was a resident, one of my least favorite things to hear from the parent of a patient was “Well, my mother thinks he has….”  The current equivalent is “I looked on the Internet and I found…”  Many of you know that fear of having to contradict grandma or Google, of the often lengthy and sometimes contentious discussions that would ensue.

Now along come new apps and devices that are only going to make this kind of conversation more common.  Examples include an iPhone attachment that turns the camera into an otoscope, and another that obtains an EKG.  In both cases, the image or tracing can be transmitted to a health care provider for interpretation, but naturally the patient and family have access to it as well.  Most electronic health records have some form of patient portal (such as Epic’s MyChart) that allows access to test results.

Health care, like many other sectors of the economy, is becoming democratized.  Patients are demanding a more active role in their care, a decades-long trend that is being facilitated and accelerated by advances in information and other technologies.  It is understandable that health professionals would, to varying degrees, lament or resist this change.  Our roles become, if not necessarily, harder, at least different.  I liken it to how the role of educators has shifted.  Teachers used to be the experts, valued for their ability to master a subject and convey information to passive recipients, usually via lecture and recitation.  In the early 20th century, Woodrow Wilson introduced the concept of the preceptorial – education not as passive transmission of knowledge but facilitated discussion – which quickly became the dominant model at the university level.

Similarly, medicine is becoming less of a hierarchy and more of a partnership.  Providers need to be not only technically skilled, but able to serve as preceptors to patients who become active participants in their own health management.  We can bemoan or belittle the use of the Internet and other resources by patients and families seeking a greater role in their care, or the use of a smart phone to look in their child’s ears, but it’s not going away.  Our best bet is to guide them, so they can make good use of what can be at best confusing and at worst misleading information.  Last summer my son sent me this email:” I have a rash on my hands.  According to Google, I either have eczema or AIDS.  I hope it’s the former.”

At a national pediatric meeting a couple of years ago, one speaker contended that the area of “medical interpretation” – communicating medical concepts to the general public – would be one of tremendous growth in the next decade.  Undoubtedly there will be non-physicians who will do this, and do it well – I think, for example, of Rebecca Skloot, author of The Immortal Life of Henrietta Lacks – but it’s also part of our job as providers.  As an academic medical center, we embrace innovation and education; it should be just as true of our patients as our students and trainees.  As Sy Syms used to say, “An educated consumer is our best customer.”

Hitting the Wellness Trail

June 6, 2014

CHW LogoJames brought me a caterpillar the other day.  Never having met him before, I was impressed with this 10 year old’s gumption in bringing an insect on a milkweed leaf, unsolicited, to the office of the executive vice president of the hospital.  I was even more impressed when he started to talk.  James, who has spina bifida, has spent a lot of time at Children’s Hospital of Wisconsin.  But he’s pretty unimpressed with our clinics and operating rooms.  What gets him going is the park-like space across the street on the County Grounds.  Once the home of the Milwaukee County School of Agriculture and Domestic Economy, Asylum for the Insane, TB sanitorium, and poor house, among other things, the County Grounds is now largely occupied by the Milwaukee Regional Medical Center, UW-Milwaukee Innovation Campus, a golf course, and stormwater detention ponds.  But pockets of the grounds remain undeveloped, including the Monarch Butterfly Trail, where each year thousands of these beautiful and delicate creatures gather on their southward fall migration to Mexico.

James shared with me how he loves to visit the trail when he comes to the hospital.  It is a calming, healing place where he feels connected to the wider world.  It gives him energy.  As James’ mother said, “the County Grounds has become a refuge for our family.  Having a peaceful, natural place to escape to so easily has had a tremendous impact on the mental and physical well-being of everyone in our family.”  While the miracles of modern medicine have allowed James to walk, it is the miracle of nature that allows his spirit to soar.  James met with me to ask my support in developing a nature trail on the part of the county grounds nearest the hospital.  He described how kids like him would have a place to get away from the lights and sounds and smells of the hospital, and enjoy the trees, birds, and bugs, maybe even deer and coyotes!

There is a growing awareness of the power of nature to heal.  Children in particular seem to have a need for some “wildness” for their well-being.  Many hospitals have installed gardens: we have our own lovely Noel Family Healing Garden, for which many of our families are tremendously grateful.  Other hospitals have gone further, investing in more extensive adjacent nature trails. Mid Coast Hospital in Maine, for example, describes its 3300 feet of paths as a place of exercise and contemplation for patients and visitors (and staff).

James’ story rang true to me.  This week my dear niece, Finley Broaddus, succumbed to her brief and ultimately unsuccessful fight against liver cancer at age 18.  Always a passionate advocate for nature, she established Finley’s Green Leap Forward Fund, allowing family and friends to contribute to preserving and healing the planet in her memory.  A month ago, she left the hospital for the first time after six weeks.  When she went outside, she just sat in the grass and closed her eyes.  My mother-in-law described how she could almost see the Earth’s energy rise into Finley’s frail body, reanimating her and elevating her spirits.

I’m imagining a Wellness Trail, meandering through the woods and wetlands just a few hundred feet from the hospitals, and now easily reached by a pedestrian bridge.  A place where kids like James and Finley could wander, soaking up the healing energy of the natural world to complement the various therapies we provide.  And maybe seeing a hawk, or a deer, or a caterpillar.

to Your health

May 30, 2014

CHW LogoRemember when cigarette ads featured physicians smoking?  Well, I don’t either; I’m not quite that old.  But I do remember in the 1980s, numerous patients I encountered at medical school in North Carolina believed – in some cases based on doctors’ advice – that smoking was healthy because it exercised the lungs and soothed the throat.  Moreover, we sold cigarettes in the hospital (this was North Carolina, after all), and many providers and staff smoked.  People are influenced not only by what doctors and nurses say, but what they do, when it comes to advice on health behaviors.  For example, one survey showed patients had less trust in health advice from overweight doctors than from those of normal weight.  (Although another study showed that overweight patients were more confident in dietary advice from doctors who were also overweight.  I guess we sometimes listen for confirmation rather than for understanding.)  We can also influence our colleagues through our “shadow of leadership.”

If we want to promote our value of health, we can’t just talk about it.  We need to model it.  On the positive side, a Gallup survey shows that Wisconsinites are above the national average in terms of exercise and eating fresh produce, though granted the national average isn’t all that great.  But there’s a lot more we as individuals can do, starting with small but meaningful steps:

1)       Literally, take steps.  Use the stairs.  While I am admittedly a fanatic who acts like I have an anaphylactic response to elevators, even pledging to use stairs whenever you are going 2 floors or less would have a big impact.  Each minute of walking up stairs burns about 7-8 calories (unless you’re eating a donut while you’re walking).  And it frees up the elevators for patients and families who really need them.

2)      As John Cleese once said, “You should eat more fresh fruit.”  We are fortunate around here to have an abundance of farmer’s markets in the area – including one on the CHW campus later in the summer – where you can get locally grown produce, supporting not only your personal health but the health of the community.

3)      Get out of the car.  In US metro areas, nearly half of all car trips are less than 3 miles, and 28% are less than one mile.  In fact, 2/3 of all trips less than a mile are made by automobile.  I can’t imagine driving less than a mile.  It’s easy to avoid the car if you live in a dense area like the east side of Milwaukee or Wauwatosa, but even if you live in the exurbs or the country, it’s likely that once you’ve driven to a destination for shopping, for example, you could get around more on foot while you’re there.  To start, think of 1 or 2 times you get in the car each week that you might walk or bicycle instead.  If you get really ambitious and start cycling everywhere, join the Children’s Hospital of Wisconsin team for the National Bike Challenge.

4)      Enter the cone of silence, at least email silence.  Thanks to Henry Ford and various unions, the five-day work week has been standard in the US since the 1920s.  At least until the 1990s.  With the rise of computing and communications technology allowing constant accessibility, there has been a trend toward longer hours and seemingly continual connectivity.   This, studies show, is bad for health as well as for productivity.  In other countries, governments and large corporations are instituting restrictions on access to email during evenings and weekends.  This is, I admit, easier said than done.  But I try to set aside at least one day a week where I do not look at my work email.  And I am trying to avoid sending email to others on the weekends, lest people feel I expect them to be looking at it and responding.

We don’t see doctors and nurses walking the halls of the hospital with a Chesterfield dangling from their lips anymore.  That’s progress.  Now let’s see more people taking the stairs, eating local produce, and relaxing on their days off.  The first steps on the road to health can’t be taken in a car.


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