Latest Blog Posts & Articles


Half of Healthcare Spending: For 1/20th of the People

It is not unfair that we spend more on medical care for some people than others. After all, some people are sicker than others. If there’s anything unfair, it’s probably the uneven distribution of illness and disability. That said, the disparity in healthcare spending across people is pretty staggering. As this picture shows, courtesy of The Financial Times, half of all US healthcare spending goes to 5% of people receiving medical care: 

It is not always great to be a big spender!

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If We Cut Surgical Pay, Will Surgeons Cut into More People?

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Knee replacements are booming. Between 2005 and 2015, the number of knee replacement procedures in the U.S. doubled, to more than one million. Experts think the figure might rise 6-fold more in the next couple decades, because of our aging population. Since many people receiving knee replacements are elderly, Medicare picks up most of the cost of such procedures. It shouldn’t be surprising, then, that the program is experimenting with ways to reduce the cost of each procedure.

The problem is – if healthcare providers make less money on each knee replacement they perform, they might start replacing more people’s knees than they should.

Does that sound crazy? Well consider what happened when Medicare began experimenting with a new way of paying for knee replacements – something called bundled payment. Under such reimbursement, Medicare pays one lump-sum for the total cost of a knee replacement – not just the cost of the operation but also the cost of post-operative x-rays, physical therapy, even time in nursing homes or rehab hospitals. Before bundled payment, providers received separate payments for each of these services. As a result, inefficient providers would take more x-rays than necessary, or keep patients in rehab hospitals longer than needed, and they would be rewarded for such inefficiency. Under bundled payment, providers cannot send separate bills to Medicare for hospital charges, physician fees, outpatient x-rays, and the like. Instead, they get a lump sum payment to cover all these expenses. Moreover, Medicare tracks all the knee-replacement costs for a given patient, over a 90 day period. If a patient incurs lower expenditures than expected, Medicare gives the providers part of these savings back as a reward. (Warning – this is a WAY oversimplified description of bundling.)

Early evidence suggests that bundled payments reduce the cost of knee replacements by an average of almost $1200 per patient. Save that much money on a couple million such procedures in a year, and we are looking at billions of dollars of savings. Moreover, research to date suggests that these savings don’t come at the expense of quality, at least as far as we can tell. (Quality measurement in healthcare is notoriously difficult.) For example, when knee replacements were paid for through bundled payments, there was no subsequent increase in readmission to the hospital or emergency room visits among patients whose procedures were reimbursed according to bundled payments. Same quality at a lower price – who could be against that?!

Well, caution is in order. Healthcare systems that enrolled in the bundled payment system might have saved money on each procedure, but they more than made up for that by increasing the number of procedures they performed – about three procedures more per hospital compared to hospitals not receiving bundled payments. This finding, indeed ALL these findings, are tremendously preliminary. Bundled payments are still in their infancy. Quality measurement still doesn’t capture everything we’d like it to.

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

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The Key to Surviving Your Hospital Stay? Get Admitted During Inspection Season

A fascinating study from JAMA Internal Medicine shows that hospital mortality rates decline when hospitals are being inspected by The Joint Commission, a national accrediting agency. Here’s a picture showing the research findings:

Which raises the question – is there a way for hospitals to be vigilant even when they aren’t being inspected?

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Talking about Healthcare Costs with Your Oncologist

My colleagues and I just published a study in The Journal of Oncology Practice, showing what happens when the topic of healthcare costs comes up during oncology clinic appointments. Check out this nice news article discussing our findings:

Even brief conversations between oncologists and patients about cancer costs can help reduce treatment expenses, a new study suggests.

“Increasingly in oncology there are many therapeutic options and they all differ slightly from one another. Where there is a huge difference, a doctor is going to recommend the best one that is the best hope for the patient. When there is a small difference and the big issue is cost, I think it’s relevant to discuss it with patients since they are going to bear some financial burden,” said Dr. Richard Schilsky, chief medical officer of The American Society of Clinical Oncology (ASCO).

“I am hopeful that as doctors read about studies like this they realize that it’s feasible to discuss cost in patient encounters,” said Schilsky, who was not involved in the research.

Researchers analyzed 677 transcripts of conversations taped in 2010-2013, between 56 oncologists in private practice clinics across the country and patients with breast cancer. Most patients were 55 to 74 years old and insured.

Cost came up in only 147 conversations, or 22 percent. When it did come up, oncologists were the ones who raised it 59 percent of the time, the research team reported in the Journal of Oncology Practice.

Half of the discussions lasted only about 33 seconds. But even though the discussions were brief, they were substantive enough to lead to helpful and creative solutions for patients in most cases, said lead author Dr. Wynn Hunter of the Duke University School of Medicine in Durham, North Carolina.
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Repealing Obamacare Could Close Your Local Hospital

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Last spring and summer, the Republicans stumbled in their efforts to repeal and replace Obamacare. But they might try a new approach later this year. If they do, expect to hear more debates about what their replacement plans mean for chronically ill Americans. People with pre-existing conditions might get priced out of insurance. People without insurance might delay important medical care, and suffer accordingly. These are serious problems, and Republicans ought to explain what they will do to avoid harming so many people.

But lest you think it is only the poor and downtrodden who will be harmed by this legislation, consider what will happen to your favorite local hospital. Without paying customers – i.e. people with insurance – it is going to lose money. That means even if you are not at risk for losing your insurance, you might lose the ability to go to your neighborhood hospital.

Consider the impact of Medicaid cuts on hospitals. Some Republicans already refused to expand Medicaid under Obamacare. If Republican healthcare legislation becomes law, those states that already expanded will probably be forced to contract their programs. That is going to cost hospitals lots of money, in the form of uncompensated care. When people without insurance become grievously ill, hospitals are required to provide them with emergent care, even if they have little chance of being reimbursed for that care.

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

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On Our Way to Being a Smoke-Free Nation

Great picture from a NEJM article showing a continuing reduction in American tobacco consumption, a decline that accelerated during the Obama years. (Irony – Obama was a smoker during much of that time!)

New England Journal of Medicine

My question – What would this look like if you added in all the people using e-cigarettes?

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Do We Know How to Promote Employee Health?

According to the Kaiser Family Foundation, lots of companies are encouraging workers to get biometric screening.  Here’s a picture of that:

Kaiser Family Foundation

But is there evidence that this promotes healthier behavior? Would love someone to direct me to any relevant research.

Posted in Behavioral Economics and Public Policy | Tagged

A Surprising Way Health Insurance Might Save Your Life

Rep. Raul Labrador (R-ID) speaks with members of the media at Trump Tower December 12, 2016 in New York. / AFP / KENA BETANCUR (Photo credit should read KENA BETANCUR/AFP/Getty Images)

Back in May, an angry constituent asked Congressmen Raul Labrador why he voted for the Republican House Healthcare Bill, that the constituent claimed would cause people to die for lack of Medicaid funding. The Freedom Caucus member shot back with a now infamous retort: “Nobody dies because they don’t have access to healthcare.” Amidst backlash over what he now describes as an inelegant statement, Labrador tried to clarify his remarks: “I was trying to explain that all hospitals are required by law to treat patients in need of emergency care regardless of their ability to pay, and that the Republican plan does not change that.”

But Labrador forgot to mention that, although hospitals are required to treat emergently ill patients regardless of ability to pay, they are also allowed to bill those patients for that care. That means people without insurance often find themselves either avoiding emergency rooms altogether, or driving long distances to hospitals known for being more forgiving of medical debt. Labrador overlooked the life-threatening risks that financially strapped people take to keep out of medical debt.

Insurance sometimes saves lives by enabling people to get emergency care close to home, without fear of financial insolvency.

This travel-and-die phenomenon is not what most insurance enthusiasts think about when they say insurance improves health. Instead, they talk about how insurance makes people more likely to receive the primary care that prevents life threatening illnesses – mammograms and colonoscopies; blood pressure pills and flu shots. They point out that patients with insurance are more likely to see doctors when they start developing worrisome symptoms. With insurance, the cost of a cardiology appointment no longer stands in the way of getting that “heartburn” checked out. In short, insurance improves health and saves lives by being the difference between whether or not people receive lifesaving medical care.

(To read the rest of this story, please visit Forbes.)

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Writing Sabbatical

Vacation PeterI am currently on sabbatical (and enjoying some hiking in the Appalachian Mountains). Blog posts will resume in September!

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Who Receives More Wasteful Care: Medicaid Enrollees or People with Private Insurance?

Some medical services are unnecessary. Is it your first day of uncomplicated lower back pain? You don’t need an x-ray.

But many patients continue to receive such services anyway, perhaps because they demand them or, perhaps, because their providers keep recommending them. But does the likelihood of unnecessary services depend on your insurance?

Specifically, do Medicaid enrollees receive fewer unnecessary services than people with private insurance, because of the relative stinginess of Medicaid reimbursement? Or do they receive more, because people on Medicaid have more need or greater demands?

The answer is–yes and yes. Medicaid enrollees receive more of some unnecessary services and fewer of some other unnecessary services. That, at least, was what Christina Charlesworth and colleagues found when they studied people in Oregon. They assessed the frequency with which Medicaid enrollees and privately insured patients received 13 unnecessary services, things like imaging tests for uncomplicated low back pain and arthroscopic surgery for wear-and-tear arthritis of the knee. Overall, the rate of unnecessary services didn’t differ by insurance, but did differ for specific services.

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