Latest Blog Posts & Articles

Are Healthcare Profits Unethical?

AMA LogoI recently spoke with Audiey Kao, an ethics expert at the American Medical Association. Our conversation has been released as a podcast. We talked about quite a few things, but the part I enjoyed the most involved a gentle disagreement about healthcare profits. Here is a link to the podcast: AMA Journal of Ethics Podcast: Ethics Talk August 2015

Posted in Uncategorized | Tagged ,

Blog Articles Will Resume in August

LakeI am on a “writing sabbatical” this summer with limited access to the internet. I will resume posting articles in August. I hope everyone is enjoying their summer!

Posted in Uncategorized

Your New Liver Is Only a Learjet Away: Part 3 of 3

Photo Credit: OrganJet

Photo Credit: OrganJet

As I have described in two earlier posts, here and here, the transplant system in the US suffers from terrible geographic disparities. People needing liver transplants in Northern California wait more than six years on average for an organ to become available, versus only three months in places like Memphis Tennessee. The solution to the geographic problem seems straightforward: stop giving priority to local transplant candidates over needier candidates in other locations. And the only barrier to fixing the problem appears to be the recalcitrance of transplant centers who are benefiting from the current system. Indeed, in 1999, the Institute of Medicine called upon the transplant community to reduce geographic disparities in transplant access by sharing organs more widely. By that time, the science of organ preservation had already advanced to the point where organs like livers and kidneys could be transported successfully from New York to Tennessee and still be healthy enough to thrive after transplantation. Yet a decade and a half later, the system remains unchanged. Bruce Vladek, former director of Medicare and Medicaid, laments that “the transplant community has largely ignored the [IOM’s] recommendation.” Sharing transplantable organs would give patients a more equal chance of receiving transplants, regardless of where they live, and would also eliminate the unfair advantage patients receive when they list themselves at multiple transplant centers.

But this solution is not as straightforward as it seems. If the transplant system begins flying organs across transplant regions, those centers with the longest waiting lists, typically filled with the sickest patients, would become net importers of transportable organs. Huge programs like the University of Pennsylvania would become even bigger. And some, perhaps most, small transplant programs would go out of business, unable to compete for scarce organs when they become available. With much shorter waiting lists, the chances that one of their patients would be the top candidate for an available organ would be relatively slim, like competing in a lottery where everyone else has five times as many tickets as you do. Moreover, if small transplant programs collapse, that could doom the hospitals and medical centers housing those programs. The money the centers lose on, for instance, treating Medicaid patients with pneumonia would no longer be balanced by the money they make transplanting people with liver disease. Finally, the loss of the smaller programs could make it harder for patients in rural communities to undergo transplantation evaluations.

In trying to make our transplant system fairer, we are forced to decide whether we are willing to drive small transplant programs out of business. Indeed, questions about whether to protect small medical centers from the business of medical practice are becoming increasingly relevant across American healthcare, even beyond the boundaries of transplantation medicine. Small medical centers are under intense pressure to compete for patients, in part because they have a difficult time matching the price of high-volume centers. Consider a medical center like the Mayo Clinic. Because of its size and experience, the Clinic has become more efficient than many smaller medical centers, the result being a growth in market share, as patients fly across the country to Rochester Minnesota for their artificial hips and their pacemaker implants, their healthcare savings more than making up for the cost of the trip. Such market-share dominance is already becoming an issue in organ transplantation. Wal-Mart has contracted with the Mayo Clinic to perform transplants on any of its employees who develop organ failure. Wal-Mart even pays to house these employees near one of Mayo’s hospitals, so they can wait for organs to become available and recover from their subsequent transplant.
Contracting with the Mayo Clinic makes sense for Wal-Mart, because the company can obtain relatively low price transplants for its employees. Mayo’s size offers it efficiencies of scale not available to smaller transplant programs, and Wal-Mart’s size no doubt enabled it to negotiate discounted rates for the care its employees receive.

Large medical centers not only have efficiencies of scale, that allow them to charge lower prices, but often provide higher quality of care for complex conditions, because they gain more experience treating such conditions. Research has shown that, all else equal, experienced healthcare providers often provide better care than less experienced ones. For instance, among patients with pancreas tumors, 14% die shortly after surgical removal of the tumor at hospitals where such procedures occur one or two times per year. In hospitals where such procedures are more common, postoperative mortality is less than 4%.

Debates about organ allocation must consider this relationship between the volume and quality of healthcare. David Axelrod, a Dartmouth transplant surgeon, conducted a study of liver transplant outcomes at small and large transplant programs, comparing the smallest third of programs (which transplanted a median of 21 patients per year) to the largest third of programs (which transplanted more than 90). He found, all else equal, that patients transplanted at the smaller programs were 30% more likely to die in the first year after their transplant. “The differences were striking,” notes Axelrod, “but that does not mean all patients should head to large transplant centers, not with the way our current system is set up. After all, some of those large programs, like ones in San Francisco where Steve Jobs lived, also have long waiting times. If you have a large center with great post-transplant outcomes, but most patients die before they ever get transplanted,” he asked me, “is that the best option for the patients?”
I interpreted that as a rhetorical question. (To read the rest of this article, please visit Forbes.)

Posted in Health Policy | Tagged , ,

Your New Liver Is Only a Learjet Away: Part 2 of 3

Photo Credit: OrganJet

Photo Credit: OrganJet

Irena Bucci was receiving follow-up care after delivering her second baby when the obstetrician discovered a problem with her kidneys. “My creatinine was rising,” creatinine being a waste product normally cleared out of the bloodstream by healthy kidneys, “and my doctor didn’t know why. I didn’t have high blood pressure or diabetes,” two diseases that are common causes of kidney failure. Bucci met with a number of kidney specialists, in hopes of uncovering the cause of her kidney failure. “But the tests didn’t discover one. And without a diagnosis, they couldn’t figure out how to treat my illness. They told me it was just a matter of time before my kidneys failed.”

In the absence of a transplant, kidney failure is usually treated by dialysis. With this treatment, patients no longer face imminent death. Prior to the emergence of dialysis, people with irreversible kidney failure usually died in a matter of weeks. On dialysis, many patients live for years. But they do not necessarily live in great health. The medical literature estimates that patients on dialysis face annual mortality rates close to 20%. Bucci desperately wanted to avoid that fate. “My doctor urged me to find a living donor, and get transplanted before I needed dialysis. A few even told me that since I am from Russia, I should go abroad and find someone willing to ‘donate’ a kidney.”

But Bucci was not comfortable receiving a kidney from a stranger—that struck her as both unethical and as medically dangerous: “Who knows what kind of organ you would get that way.” She also didn’t have any relatives who could serve as living donors. So she settled in for the long wait to receive a transplant from a deceased donor. At Georgetown University Medical Center, near where she lived, less than a quarter of their kidney transplant candidates receive a transplant in a typical year. Bucci knew that each one of those years she spent waiting for a transplant could be her last.

And then she read Walter Isaacson’s biography of Steve Jobs, and learned that he had flown to Tennessee to receive a liver transplant, and thought to herself: “Why don’t I do something like that!” She decided to get herself listed at as many transplant centers as possible, and travel to which ever one could find her a suitable organ.

Bucci began undergoing transplant evaluations at hospitals located relatively close to Washington D.C., but that operated in different transplant areas than Georgetown. In the process of undergoing those evaluations, she received some bad news that made it even more important for her to get listed at multiple centers – she had a PRA of 90. The PRA, or Panel Reactive Antibody test, estimates the percent of potential donor kidneys that a person’s immune system will reject. Probably as a result of her pregnancies, Bucci’s immune system was highly reactive; her body was choosy about what kind of foreign antigens it would tolerate. Whatever the reason for her high PRA, Bucci would be unable to accept 90% of eligible donors. As an IT expert with a Master’s degree in mathematics, it was not difficult for Bucci to figure out that her long wait for a kidney had just gotten longer.

That’s when Bucci began spending her free time getting herself onto as many transplant waitlists as possible. (To read the rest of this article, please visit Forbes.)

Posted in Health Policy | Tagged ,

SCOTUS Has Ruled on Obamacare. So What’s Next?

Photo Credit:

Photo Credit:

In a 6-3 decision, the Supreme Court Thursday spared the Affordable Care Act from what would have been a death blow.

The Court’s action upholds the right of the federal government to subsidize low-income Americans who purchase health insurance through, the federal exchange. Infamous for its rocky start, now presents millions of Americans with price information for a list of insurance plans available to them where they live. is now largely glitch free, but it — and state insurance exchanges — still need major overhauls, so they no longer lead Americans to make bad insurance choices.

Consider the way the exchanges divide health plans into tiers, based on metallic labels — of bronze, silver, gold and platinum. The bronze tier features plans with relatively low monthly premiums and high out-of-pocket medical costs, while the gold and platinum tiers feature more expensive and comprehensive plans. Thanks to these metallic labels, a consumer who faces a choice among, say, 18 insurance plans can choose instead to look at only the six silver plans, or the five bronze ones, a much less daunting task.

This sounds good in theory but, in fact, consumers don’t act in ways web designers might expect. Several months ago, two colleagues and I published an article in the New England Journal of Medicine reporting on an experiment we ran among bus riders in Durham, North Carolina. We gave people brief descriptions of bronze, silver and gold health plans and asked them which type of plan they would be most likely to choose. Then, to test whether the metallic label was unduly influencing their choices, we switched around the description of bronze and gold plans for half of the riders:

We discovered that gold plans were more popular than bronze plans, no matter which type of plans we described as being “gold.” In other words, people made potentially life-changing decisions based on assumptions about the colors rather than the actual information.

With both the state and federal health exchange sites, we need to pay more attention to how the principles of decision psychology and behavioral economics affect this process. As Richard Thaler and Cass Sunstein warned in their best-selling book Nudge, poor design can cause people to make choices that act against their best interests.

Consider Colorado’s exchange site, which lists health insurance plans from lowest to highest monthly premium. Does that order cause people to pay too much attention to monthly premiums, and not enough to other out-of-pocket costs?

Or consider the Massachusetts exchange, which presents information about the various plans in columns, with monthly premiums shown on the left, followed by information on co-pays, annual deductibles and maximum out-of-pocket expenses. Should the maximum expenses be on the left side instead? What size and color font will best highlight information consumers need to make their choices?

We don’t know the answers to all these questions yet, which is why designers of the health insurance exchanges should work closely with decision-science researchers to find out what works best. But, meanwhile, we do know enough to call for several design changes. For starters, the websites should make it easier for people to figure out which healthcare providers are “in network” for any given health insurance plan. Many people care a great deal about making sure their health insurance plan pays for the health care they receive from their current providers.

The websites should also make it easier for people to estimate the total annual costs with each plan—the sum of their premiums, co-pays, deductibles and other out-of-pocket expenses. d, these websites need to be guided by research on how consumers actually make decisions. (To read the rest of this op-ed, please visit The Sun-Sentinel.)

Posted in Health Policy

What Physicians Can Learn from Veterinarians

Photo Credit: Rebecca Plevin / Marketplace

Photo Credit: Rebecca Plevin / Marketplace

A while back, I linked to a story by Rebecca Plevin, out of California Public Radio, on the challenge of discussing health care costs.  Well, she has tuned up that piece and placed it on Marketplace. Here is a print version:

When a doctor prescribes a medication, most of us don’t ask how much it’ll cost. It makes sense: for a lot of people – both doctors and patients – talking about the cost of care is a totally foreign concept.

Peter Ubel is the perfect person to explain why that is. He’s a physician who now teaches at Duke University, specializing in the overlap of ethics, behavioral economics and medicine.

“Not that long ago, if a person had insurance, they had really good insurance that covered the vast majority of the expenses,” Ubel says. “So there really wasn’t much to talk about when it came to money.”

But these days there’s a lot more to talk about. The Kaiser Family Foundation says last year, 80 percent of people who got insurance through their job still faced an annual deductible that could run as high as $3,000 or more.

That means we all have skin in the game now, Ubel says.

“When the doctor recommends one medication to us, we might have reason now to ask whether another medicine would be almost as good and a lot cheaper,” he explains.

That type of conversation is still rare, but it is happening in at least one medical field.

At Mohawk Alley Animal Hospital in Los Angeles, Dr. Diane Tang examines the mouth of a huge black and white cat named Melvin.

“Tell me a little about what’s going on with Melvin today,” Dr. Tang says to Melvin’s owner, Morgan Bradley. Bradley replies that she’s concerned about a bump on the cat’s face.

Tang lays out testing and treatment options for Melvin.

Then, Kayla Wilkinson, a technician assistant at the hospital, enters the exam room and says something rarely said in a doctor’s office for people: “We have two estimates here,” Wilkinson says, as she walks Bradley through the different options.

Regarding one treatment plan, she adds, “it is most definitely not going to ever get higher than the high point, but just to prepare you, we like to give you a pillow for what to expect.”

Bradley says she appreciates getting this information upfront.

“It always helps in knowing what to prepare for and how much money I’m going to have to scrounge for,” Bradley says.

Dr. Reshma Gupta, an internal medicine physician at UCLA, says the veterinarian model is a good one for the human health care system, but there’s a caveat.

She says doctors and patients can — and should — discuss different treatment options, just as veterinarians do.

“I think where it works is that, when you’re trying to make shared decisions with patients, you come up with all the options that are available for the patient,” Gupta says.

The problem, she says, is doctors who treat people have no way of knowing what those options will cost.

Doctors “do not have access to costs of medications, or commonly ordered labs, or radiology when they’re face to face with a patient,” Gupta says. “And so they don’t have the ability to actually offer that information to patients.”

Ubel, the Duke University professor, says it comes down to one word: insurance. (To read the rest of this article, please visit Marketplace.)

Posted in Health Policy | Tagged

Your New Liver Is Only a Learjet Away: Part 1 of 3

Photo Credit: OrganJet

Photo Credit: OrganJet

The forty million dollar Gulfstream jet landed at Memphis International airport in the early morning hours, its schedule hastily arranged earlier that day from Northern California, where the flight originated. Waiting on the tarmac was Dr. James Eason, head of transplant surgery at Methodist University Hospital, who planned on whisking the passenger to the operating room for a liver transplant. The passenger rushed to Memphis not because he lived in Memphis and happened to be out of town when an organ became available, but rather because he knew that flying from his home in Northern California to Tennessee would give him his best chance of receiving a life-saving organ.

You see, the demand for transplantable livers in Northern California far outstrips the supply, meaning there is a decent chance a patient with end-stage liver disease will die before a replacement organ becomes available. But in Tennessee, the number of people waiting for a liver transplants is significantly smaller, per capita, than California, and as a result the supply of transplanted livers is much better matched to the demand for such organs. As a result of these geographic variations in supply and demand, patients in Northern California wait more than six years, on average, for a liver transplant, whereas the majority of patients in Tennessee receive new livers in less than three months.

That’s right: six years versus three months!

The passenger on the Gulfstream that morning was Apple co-founder and CEO, Steve Jobs. After being told he needed a liver transplant, Jobs had learned about the huge disparity in waiting time between California and Tennessee, and arranged to get placed on the transplant waiting list in both locales, knowing he could fly to whichever location came up with the first available organ. So when he got a call from Memphis explaining that a 20 year old man with a compatible blood type had died in a car crash earlier that day, he summoned his flight crew and made his way to Tennessee.

Steve Jobs walked out of the plane that morning a frail shadow of his former self. Pancreatic cancer had spread to his liver and, without a transplant, he had only weeks or months to live. Thanks to that early morning flight and the talents of his surgeon, Jobs received a transplant later that day and would survive two and a half more years, a time in which he introduced the world to the iPad and to a talking phone assistant named Siri.

It was wonderful for Jobs and his loved ones that he was able to receive a transplant that day. But was it fair that Jobs could afford to charter a jet from California to Tennessee to undergo a transplant, while thousands of equally sick Californians waited at home for livers that didn’t always come in time?

Currently, less than 6% of transplant candidates are listed at multiple transplant centers. And less than 2% get listed at transplant centers a long-distance from where they live, like Jobs did. After all, there’s not much reason for Northern Californians to get waitlisted in Tennessee if they cannot afford to rent a Gulfstream on short notice to get them to the transplant center on time. This Gulfstream deficiency may end soon, however, if a start-up company called OrganJet succeeds in its goal of “democratizing Steve Jobs’ transplant experience.” According to the vision of its founder, Sridhar Tayur, OrganJet will make sure that distant transplants are no longer available to only the wealthiest of patients. In fact, if insurance companies agree to pay for OrganJet’s services, as Tayur hopes, virtually everyone with healthcare coverage (be it Medicare or BlueCross/BlueShield) will be able to afford to fly to whatever location gives them the best chance of a life-saving transplant.

Would such democratization be a good idea? The answer to that question is more complicated than it appears at first glance, and raises questions about healthcare equity and regional variation in healthcare quality that are relevant well beyond the world of solid organ transplantation. The OrganJets of the world may finally force us, as a society, to talk more explicitly about just how fair we want our healthcare system to be.

In the US, hearts, kidneys and livers are distributed in a manner that strives to give every patient fair access to these life-saving organs. When a deceased donor’s liver becomes available, the local organ procurement organization (or OPO) offers the liver to the sickest transplant candidate, as long as that person’s blood type is compatible with the donor. Sickest-first is the rule. A rich investment banker with moderate liver disease won’t jump ahead of a bricklayer with severe disease. A white person won’t get priority over an African American, nor a man over a woman, nor a Christian over a Muslim, nor even a Protestant over (God forbid?) an atheist. In short, the liver transplant allocation system in the US is an astonishingly explicit and fair way to dole out life-saving resources.

For all its ethical wonders, however, the liver transplant system is far from perfect. For starters, people without health insurance often have a difficult time accessing the transplant waiting list. Critics quip that the first test physicians order when evaluating patients for transplant is a “wallet biopsy.”
There is another major problem, as Steve Jobs’ experience made so apparent. Barring the kind of wealth that enables people to rent out private jets, a person’s chance of receiving a life-saving transplant depends very much on where that person lives.

Sridhar Tayur first learned about geographic inequities in organ transplantation when he was an invited speaker at Northwestern’s Kellogg School of Management in October 2010. Out for dinner that night with colleagues, Tayur asked one of the Northwestern faculty members what research he did for a living. The professor, Baris Ata, said he was studying fairness in kidney transplant allocation, trying to determine, for example, whether patients who have been waiting longest for their kidney should receive priority over those more likely to benefit from available organs. Such a research topic is not out of the norm for a business school professor to study. Business schools are loaded with faculty who use advanced mathematical models to solve challenging real world problems. Just a few years ago, in fact, Alvin Roth won the Nobel Prize in Economic Sciences for developing methods that have helped create kidney exchange programs that match chains of living donors to needy patients.

Tayur realized he had the perfect skill set to solve the problem of geographic inequity in organ transplant allocation, and that his solution would not require any policy changes. He had made an academic reputation for himself figuring out the mathematics of “inventory and supply chain optimization,”—in other words, for helping companies figure out how to allocate scarce resources to maintain the right amount of product on store shelves vs. warehouses. Tayur had even founded and run a software company, SmartOps Corporation, that helped companies make these decisions.

That company had left him, if not Steve-Jobs-wealthy, then at least financially secure: “When you do well in software,” he told me, “you do very well.”
Tayur realized he had an opportunity to give something back to society, as a social entrepreneur: “When I was running my software company,” he told me, “I started using private jets, because I wanted more time with my family while flying out to meet customers at difficult to reach locations. I noticed that there were lots of underutilized private jets lying around the country. I recognized this as a classic optimization problem.” Earlier in his academic career, serendipitously, he had written an academic paper on how to optimize the use of fractional jets, akin to the model used by Share-cars. “I understood private jets, and I understood optimization algorithms, so I knew I could figure out how to get people access to organ transplants, by finding them affordable flights to transplant centers that have shorter waitlists.”

OrganJet was born. (To read the rest of this article, please visit Forbes.)

Posted in Health Policy | Tagged , , ,

Scheduled for Surgery? How about Some Unnecessary Tests!

Surgery can be risky. People with major cardiovascular or respiratory illnesses undergoing major surgeries, for example, are at risk for major surgical complications, even death. But healthy people receiving less intense interventions typically fly through with nary a concern. Nevertheless, perhaps worried about those few patients who suffer major complications, many physicians order a gaggle of tests on patients, even ones facing routine procedures.

Not convinced they order lots of tests? Look at this picture, from a New England Journal article, showing a spike in diagnostic testing in the month prior to surgery:

Scheduled for Surgery

Not a bad place to target for healthcare savings that will also promote the best interests of most patients.

Posted in Uncategorized

Creative Undergraduate Education at Duke

Photo Credit: Rita Lo / The Chronicle

I love teaching at Duke. I can’t believe, actually, that I’m able to do that for a living. One of the great things about teaching is interacting with smart, ambitious students. And today, Duke’s The Chronicle just wrote about one such student, Elle Wilson who took a class from me last fall, and now designed her own major to more thoroughly explore the topics we covered.

Although most students choose traditional majors like economics, public policy or biology, there is a lesser-known option for those who desire a more personalized area of study—Program II.

Program II is essentially Duke’s design-your-own major and has been in place since 1968. The 12 to 18 undergraduates per year who follow this path must submit an extensive application outlining an independent, theme-based course of study, including a senior capstone project. Instead of being based in a single discipline—as most Program I majors are—Program II uses themes to focus study, said Norman Keul, associate dean and director of Program II.

“Once you have a clearly defined theme you want to explore as an undergraduate, you cherry-pick courses that allow you to get at and explore that theme most effectively,” Keul said.

Students generally participate in Program II when they cannot study what they want to study under the standard Program I majors, explained Keul.

“The most fundamental question asked by the Program II committee when reviewing an application to Program II is whether a student can do an effective study of what he or she is interested in under Program I,” Keul said. “If the answer is yes, then we will turn the application down.

”Elle Wilson, a junior in Program II who is studying consumer markets and behavioral decision theory, initially did not anticipate pursuing a Program II major.

“I was confident that after taking a few introductory classes in a broad range, one area of study was bound to stand out from the rest,” Wilson said. “Interestingly, the opposite happened.”

A tiny portion of undergraduates participate in the program each year—about one to two percent of students. Last year, 21 students graduated from Program II majors, one of the largest groups in a long time, Keul said. But the number fluctuates from year to year depending on various trends.

“The big trend that just ended is global health,” Keul said.

Although the growth of interest in global health brought a large group of students to Program II, it also influenced the creation of a new major—the global health co-major that began Fall 2013.

“One of the features that is very interesting about Program II is that it is a crucible, a place where new trends and ideas are explored,” Keul said. “If they prove to be of sustained interest, then the faculty departments will recognize this and decide if they want to incorporate it into their regular offerings and make it a major.”

Previous examples of common Program II areas of study include neuroscience and architecture. Like global health, both of these were turned into something students could study more easily under Program I: a major in the case of neuroscience and a concentration under the art history major in the case of architecture.

Due to the personal nature of the program, close relationships with faculty are inevitable for students who complete Program II.

“There’s a kind of intimacy with faculty,” Keul said. “There’s no way you could put together a Program II without having interaction and conversation with faculty, and that’s a great thing.”

Wilson works closely with her Program II advisor Dr. Peter Ubel, a professor with appointments in business, public policy and medicine. She said she hopes to participate in research alongside Ph.D. students under his supervision. (To read the rest of this article, please visit The Chronicle.)

Posted in Uncategorized

An Eye for an Eye, a Cataract for…$4000?!

Photo Credit:

Photo Credit:

California is in the middle of an historic drought, with the government setting limits on how long people can sing in the shower. Farmers in the state may soon need to cut back on planting or production, as ground water dries up. But California is still fruitful ground for testing promising ways to improve how healthcare consumers, otherwise known as patients, shop for healthcare services. Specifically, California has shown that healthcare markets can be whipped into shape through the power of reference pricing.

In reference pricing, patients are given a maximum number of dollars from insurance to cover a given healthcare procedure with the understanding that if they choose to receive care from a more expensive provider, they will be responsible for any charges exceeding that limit. As I wrote in a previous post, California already used reference pricing to address high costs for knee and hip replacement. While many healthcare providers were charging $25,000 or $30,000 for the procedure, some were charging $60,000, $70,000, even $100,000.

The state of California realized it couldn’t continue to pay these exorbitant prices. It could have decided to force people to receive care from affordable providers. It could have regulated the price of these procedures. But instead the state took a different approach. It set a $30,000 limit on what it would reimburse patients. Overnight, state employees became discerning shoppers, avoiding high cost providers. Almost as quickly, providers began lowering their prices.

The wonders of efficient marketplaces. (To read the rest of this article, please visit Forbes.)

Posted in Health Policy | Tagged , , ,