Health Business Blog

Health care business consultant and policy expert David E. Williams share his views

HMO’s new cost control technique: patient involvement

Charles Baker, CEO of Harvard Pilgrim Healthcare, has apparently given up on traditional managed care cost control tools. Baker is calling for radical, “disruptive” measures to get patients involved in slowing down medical inflation.

He’d like to see a greater use of high-deductible plans, and more disclosure of cost information to generate competition among providers.

When I saw Baker speak a few months back, I had the distinct impression he was looking for ways to steer patients from the high cost, high reputation Harvard hospitals in Boston to more cost effective community hospitals. That will be tough.

Maybe he should speak with the folks at Sam’s Club about how to unleash the genius of the consumer.

The unmentioned piece of the malpractice puzzle

An article in today’s Boston Globe points out that fewer than 1 in 15 patients injured in the hospital actually sues for malpractice. The focus of the national debate has been on the damage done to the medical profession by the occasional sky-high award, but little attention has been given to the much larger number of cases where a patient is injured but not compensated.

We need to turn the debate toward how to prevent patients from being injured by the medical profession in the first place. The answer is to learn from the quality systems in place in other high-risk industries, such as commercial aviation.

Cap on Medicare drug benefits proposed

A week ago I predicted major pressure on the Medicare drug benefit by the 2006 election cycle. It may be coming sooner. According to Modern Healthcare:

Two Republican senators introduced a bill that would limit the cost of the Medicare prescription drug benefit to $395 billion over 10 years, the initial Congressional Budget Office estimate for 2004 to 2013…The bill, sponsored by Sens. Lindsey Graham (S.C.) and Jeff Sessions (Ala.), would establish annual spending caps and require that the benefit be reduced if its cost exceeded the annual limit.

Sam’s Club edging into health insurance market

Wal-Mart’s Sam’s Club unit and a UnitedHealth subsidiary will offer a discount program that covers a variety of health-care related services including dental, laser eye surgery, chiropractic care, acupuncture, weight loss, and fitness club membership.

Sam’s Club members pay $9 per month to access the program, which relies on aggregating customers to get discounts from providers. This program isn’t especially significant or innovative by itself, but I like the idea of a very consumer oriented company getting into the space.

Americans are terrifically savvy consumers of all kinds of goods and services. We recognize value and quality and punish retailers and suppliers that don’t deliver. But the healthcare system is structured in a way that doesn’t allow consumers to apply their shopping smarts. It’s time for that to change.

Health Savings Accounts (HSAs) and physician report cards are baby steps in that direction. Let’s hope retailers like Sam’s Club can accelerate the process.

Responses to air ambulance story

There are some interesting letters to the editor of the Wall Street Journal defending the use of air ambulances. (See Air ambulances: costly, dangerous, slow?)

They key points are:

  • ER physicians, scared of liability, are overreacting and sending even minor cases to specialty centers. (This echoes the comment from a Health business blog reader.)
  • When a rural community transports a patient a long distance in a ground ambulance, they put their own community at risk by losing their ambulance for most of the day
  • Once a patient is stabilized, sending them by fixed wing aircraft over a long distance is more comfortable than riding in a bumpy ambulance

However, a physician I know offered another argument against air ambulance use in trauma cases:

Due to noise in the helicopter and the close quarters, helicopter based paramedics are far less able to treat their patients en route than their colleagues in ground ambulances.