Planning the Patient-Centered Health Plan for America
The HealthPlanUSA Solution
HPUSA is the only true Market-based Health Plan that uses the Internet and Digital Information Technology to bring the Insurance Carrier, Service Providers (Hospitals, Surgi-centers, Physicians, Pharmacies, Diagnostic and Treatment Centers), Patients and Credit Providers together at the same interface, allowing data, information and fund transfers to occur in real time.
The patient takes an interest in making an informed decision at every step of the health care process when he or she has a financial obligation in all decision-making processes-which doctor to see, which hospital to use, which pharmacy to utilize, which laboratory to use for testing, which x-ray facility to go to for diagnostic testing, which therapist to use for physical, occupational or speech therapy. The financial stake is proportional to the cost incurred without limit. Thus, in turn, each service provider will provide the best service for the fee involved in order to assure a continuing customer (patient) base.
This plan cannot be a government plan. It has to be privately financed and funded. It cannot be publicly funded because the stakeholder leaders could never sell it to their stakeholders. Each has a vested interest and is too anxious to see the public good as winning out against their own good. That’s why reform doesn’t take place in the Public Square.
This plan will require a free enterprise benefactor that will help devise, produce, and market the plan so that each stakeholder can make his own decision. Only then will each stakeholder see it for his own benefit, but also for the public at large.
Understanding the present problem
The Major Current Problems in HealthCare
The clarion call in the healthcare debate is to repeal Obamacare – repeal and revise. When one looks at the investment of time, energy, and lawyering spent over several years on the current rendition, which has caused a marked increase in cost, anxiety in our patients, causing a loss of a doctor they trusted, then being shoved into an HMO which still identifies that as welfare, which combination then causes even more doctors to shun them, because the pay is not better but the regulations are not easily manageable, which in turn increases the overhead costs of doctors, which makes more consultant care off limits, which increases the cost of the family physician to find a consultant in difficult cases, which then makes more family physicians eliminate their Obamacare/HMO/welfare patients, which causes loss of access to healthcare to many sick and needy patients, who are then shunted into community clinics now staffed by nurse practitioners and physician assistants, with no physician oversite any more, lowering the quality of healthcare in America, with lower levels of “healthcare providers” using the laboratory and x-rays to make the diagnosis, since they don’t understand the concept of making a differential diagnosis, which places the hundreds of possible diagnosis in perspective, which doesn’t allow these lower level of healthcare providers to make an intelligent stab at the array of diagnosis to be considered, and then choosing any diagnosis they may be familiar with, possibly shoving the patient to an operation that may make the situation worse, when a simple correct diagnosis could cure this unfortunate patient in less than five days!?!
This circuitous route could cost $35 K (10 or more office visits at $150 or $1,500 + 5 or more laboratory visits at $350 per panel or $1750, + a dozen or more x-rays at $350 each + hospital ER visits, avg cost $6500 + CT scans at $900 each + surgery consults at $850 each ) when a more astute physician captain of the health care ship may have made the diagnosis in one visit (est $150) and one prescription ($50).
This is not a hallucination. We have personally seen a surgical miscalculation, with a surgical complication require a 180 day hospitalization with $900K hospital bill.
Healthcare administrators talk about a 10 to 20 percent savings or increase in premiums per year. They are unable to comprehend these 1000 percent variations in costs; the very thing that HMOs were designed to prevent. But it seems they have not been successful in controlling costs.
Government health care will never be able to control costs. Never has. Never will.
We hope the American people will realize this before it’s too late.
Understanding the present problem
The Major Current Problems in HealthCare
The $3 trillion health care industry is the only major segment of the economy that is failing, and there is nothing the employer, insurance carrier or government can do about it.
Health care is the only product or service (outside of public education) that has consistently grown worse over the past 40 years, with decreasing customer (patient) satisfaction. Every other product and service in our economy has improved in quality and grown less expensive over time, with increasing customer satisfaction.
Health care is the only sector of the economy where prices have been steadily increasing since the end of WWII. Every other sector of the economy is reaping the benefits of Moore’s Law, which states that the cost of digital technology decreases by 50 percent every 18 months. In health care, it is the reverse – less efficient and more costly. For instance, although the Length of Stay (LOS) for delivery of a child has decreased from four or five days to one or two days, the hospital cost has more than doubled. The LOS for gallbladder surgery has decreased from five days to one day, but the hospital cost has doubled. The surgeons’ fees have remained level or even decreased during this time.
Healthcare is totally out of control. Obamacare has made it more out of control. This journal, HPUSA, is our attempt to bring healthcare back into focus. Initial estimates from actuaries are that it will reduce healthcare costs by at least 40% to 50%. We have highlighted examples of this over the years. Welcome to our journey.
Planning the Patient-Centered Health Plan for America
(Continued from April 2011 section 9)
A graded co-payment for every level of service
See April Issue for Level A—Hospitals
Level B: Hospital Emergency Rooms, Urgent Care Centers, and Surgi-centers.
The research from HPUSA has elucidated some important clinical statistics to control health care costs. This data is hard to obtain and cannot be automated. It is labor intensive. At this point it is clinical: one on one. When we see large expenditures in health care, we try to determine if the patient is a candidate to be included in our series. We then indulge in a frank discussion of his or her responses to the questions concerning percentage co-payment and its effect on the patient’s utilization of health care benefits.
Health care can be stratified into a number of logical tiers. The most expensive and highly sophisticated care is in the traditional acute care hospital. We came up with a 10 percent co-payment of the hospital costs as being the best number that did not preclude needed care and was able to allow for needed hospital care. With a 10 percent co-payment, the patient policed his hospital cost better than any oversight institution saving up to 40 percent of usual costs.
The traditional hospital is like the mainframe computer industry of the third quarter of the twentieth century. It became a costly and unmanageable structure. It was salvaged by the competition of the PC industry which made the mainframe industry adapt before essentially all but IBM succumbed. Similarly, the hospital has become the vertical structure for much of health care. However, its costs are not sustainable. Just as most of the mainframe companies didn’t adapt and are no longer in existence, so the vertical integrated hospital will face similar challenges.
The free standing urgent care centers and the surgi-centers are similar to the PC industry causing a restructuring of health care. For purposes of making health care affordable, which in turn will make health insurance affordable, out research indicates that a 20 percent co-payment for these centers was the best number that did not preclude needed care and was not too large so as to prevent needed care.
Hospitals reacted immediately and forcefully by purchasing these centers or building competing surge-centers. In fact the surgeons that owned a surgi-center near our office were told by the hospital that they would like to purchase their surgi-center or they would build a competing surgi-center across the street from them. The surgeons obviously cashed in their investment and re-established a new surgi-center not nearby any hospitals and are operating successfully.
This continues the migration from the vertically integrated healthcare structure to the horizontal competitive healthcare structure. This will occur over time and there is nothing that hospitals can do to stop this restructuring.
. . . the triple play of the internet, entrepreneurship, and individual capitalism is an unstoppable force around the world, and that Individual Capitalism is the force that will shape the 21st Century.—Entrepreneur Country Manifesto.
A graded copayment for every level of service Level A: Hospital
The research from HPUSA has elucidated some important clinical statistics to control health care costs. This data is hard to obtain and cannot be automated. It is labor intensive. At this point it is clinical: one on one. When we see large expenditures in health care, we try to determine if the patient is a candidate to be included in our series. We then indulge in a frank discussion of his or her responses to the questions concerning percentage copayment and its effect on the patient’s utilization of health care benefits.
Health care can be stratified into a number of logical tiers. The most expensive and highly sophisticated care is in the traditional acute care hospital. We won’t get involved in any medical-political redefinitions of this level of care such as the somewhat controversial specialty hospital. We were even opposed to the spinning off of Psychiatric Wards to Psychiatric Hospitals several decades ago inasmuch as this lowered the level of care in these facilities for psychiatric patients.
The traditional hospital is like the mainframe computer industry of the third quarter of the twentieth century. Most of the mainframe companies didn’t adapt and are no longer in existence. IBM was the only one that was able to adapt and survive until the most highly sophisticated demands, such as accessing millions of ATMs simultaneously around the world on an integrated network that includes all financial institutions. IBM would not have survived if they had continued to compete in the laptop industry. When they sold their ThinkPad to Lenovo and refocused, they became the world leader in sophistication and problem solving again. We would expect them to develop Watson and compete with live human beings on Jeopardy.
Starting with the highest and most expensive strata of health care, the acute hospital, or the IBM of health care, what is the appropriate copayment for hospital work? The health care insurance companies have various forms of copayment, such as an 80/20 plan in which the patient pays 20 percent of the hospital charges and the insurance companies pay 80 percent. There are also 90/10 plans and those with fixed deductibles that bear no relationship to hospital charges.
There are two problems with these plans. First, few people can pay twenty percent of a $150,000 hospital bill. Even if it’s linked to a line of credit, the credit requirements are extraordinary.
Second, there is little transparency in hospital billing. Insurance companies have various arrangements with hospitals that the patient cannot see. In fact, hospitals have forced patients to go into hock for the 20 percent copayment (which is $30,000 in our example) and meanwhile the remaining $120,000 is discounted to the hospital, sometimes for even less than the patient is asked to pay on their 80 percent share. It may not be unusual for the hospital to take the patient to the cleaners for the $30,000 (20 percent) and accept the usual discounted hospital portion, which will be far less than the rest of the bill. We understand this has come under litigation and the results are not recalled.
With small or no deductible policies, it is not unusual for patients to show us statements indicating that their insurance company was billed $75,000 and the hospital accepted $7500 as payment in full. For co- payments to work effectively there has to be complete transparency. In other words, a patient knows up front what the hospital charges are and will be. This then allows for a percentage copayment to work effectively in controlling health care costs.
For instance, if a patient checks in for gallbladder surgery, he or she is told the usual charge for this procedure is, say, $20,000. And if your copayment is 10 percent, the patient is asked if he wants to write a check or utilize a credit card for the $2,000 copayment.
At this point in time, the patient can make a further assessment of the pros and cons for the surgery. A discussion with the spouse may remind him that his internist thought since he has had no gallbladder attacks, and his one stone was found on a routine exam for another problem, that he should forgo surgery for the present. In fact, they had agreed to wait, but the patient wanted to see a surgeon “for a second opinion.” Even though his internist advised against surgery, the surgeon was very convincing that he should have the operation. The internist had stated that if he hadn’t had the backache and the x-ray for that, they would not have known that he had a gallstone and the question would not have been raised. Now as they were staring health care costs in the face, they recalled this conversation. They had a number of other pressing financial struggles and so at the registration desk, he decided to put the credit card back in his billfold and sit tight for the present, realizing that an emergency could develop. However, his internist had advised him that given the nature of his stone, an emergency was not likely to occur.
Without going into the pros and cons of delaying any medical care, this simple maneuver has placed health care in the Medical MarketPlace and in competition with other finances. The Medical MarketPlace would have prevented the current catastrophic Medicare and Medicaid over utilization and our current health care crises. This further prevents utilization of our children’s finances, which obviously is very unethical. If this weren’t across generation lines, it would easily have been seen as Grand Theft because of the magnitude of the crime.
In our efforts to determine the best copayment that would control health care costs but not prevent necessary health care, we would sit down with the patient in a neutral time and make a determination: If you had a five percent copayment, would you have proceeded with the operation? If 7.5 percent? If 10 percent? If 15 percent? If 20 percent? If 25 percent? If 30 percent? Etc, et al.
Our results indicated that in the majority of cases, a 5 percent copayment did not control costs and allowed over utilization. A 15 percent or greater copayment controlled costs very well, but we felt it prevented some necessary hospitalizations or operations. For the vast majority of patients, a 10 percent copayment controlled over utilization of hospital care rather well but did not prevent necessary health care that would reduce the quality of care.
Hence, in our research so far, a ten percent copayment on hospitalizations was the ideal amount to prevent over utilization and not cause under utilization.
If the health care insurance is further tied to a line of credit at a favorable interest rate appropriate for sick people, that could be administrated by one of the credit card companies, everyone would have access to the highest level of health care.
To read about Level B etc, stay tuned. To purchase a copy of the Business Plan, go to www.healthplanusa.net/bookstore/.