Managed Care 101 in 2010 (Part XI): The Managed Care Method


The guiding principle of managed care as a process is that: A) ‘One cannot manage what one does not measure,’ and the obverse, B) ‘One cannot measure what one does not manage.’

The guiding principle of managed care as a process is that: A) ‘One cannot manage what one does not measure,’ and the obverse, B) ‘One cannot measure what one does not manage.’ I'd like to introduce these concepts with clinical examples.

My abscessed tooth explains why you cannot manage what you don't measure.

Recently, I was in a great deal of mandibular pain. On my third relatively sleepless night and worried if getting the root-canaled tooth fixed would remove me from covering the practice. The X-ray was quite telling; I was put on antibiotics (arbitrary), round-the-clock Motrin, and then I had to make a decision about what to do. I'm a pediatrician; as my grandmother would say, 'what do I know from the dentist?' There I was, covering the waterfront of dental care—dentist, endodontist, and then oral surgeon. Three providers; three options and while the detail is not particularly relevant to this story, the primary care dentist’s solution - extraction and bridge - $3-4K and three-four visits; the endodontist - a consultation visit and to revise the root canal - $1800 - $2K and three more visits; and the oral surgeon - a consult and then an apical procedure for $1550-$1600 and two more visits. If that wasn’t bad enough, I was in no position to decide—emotionally, practically, or financially. (I pity the patient with fewer resources then I—financial or ability to navigate the healthcare system.)

What patient (or family), in their hour of need, is interested in doing scientific research? Risk vs. benefit; procedure vs. possible outcome, probability, etc. I stood before the receptionist in the office I chose to do the work in pain! She was matter of factual- "It’ll take, literally, a month to work this out with your insurer," and that was after I had agreed to use plastic for balances unpaid. ‘It’s your life or your money, Doc!' The consent form was long and tedious, mentioning every unlikely adverse outcome in rather terse terms, and then I had to agree to being put to sleep - by a stranger. This is healthcare at its best—the whole process is haphazard and since little of it is being measured, it is not optimally managed.

The study of the probable relationship of PPI therapy to osteoporosis-related fractures typifies not being able to measure what you do not manage.

A "large administrative database was used to examine the association between PPI use and fractures. Although decreased calcium absorption is an attractive possible mechanism for the observed association, no data exist to support or refute this explanation. Additionally, use of administrative data limits the investigators’ ability to control for a host of potential confounding factors, such as comorbid illnesses and use of other medications (e.g., nonsteroidal anti-inflammatory drugs) that might increase risk for fractures. Further prospective studies, with better assessment of potential confounders, are needed to determine the clinical significance of this association and its potential influence on treatment decisions."

-Bjorkman D. as published in Journal Watch Gastroenterology October 3, 2008

It should come as no surprise to even the casual observer of healthcare that other than the billing form and isolated lab reports and filled prescriptions data, there are little data about what happens to patients, where, when or why.

The following is quoted from "Health Insurance Costs":

"Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families."

National Health Care Spending

• U.S. health care spending reached $2.4 trillion in 2008 (that is 17% of our GDP and is projected to be 20% by 2017, reaching $3.1 trillion in 2012, and $4.3 trillion by 2016). This is 4.3 times the amount spent on national defense, by the way.

• 46 million Americans are uninsured, but we spend "more on health care than other industrialized nations, and those countries provide health insurance to all their citizens," i.e., 10.9% of the GDP in Switzerland, 10.7% in Germany, 9.7% in Canada and 9.5% in France.

Employer and Employee Health Insurance Costs

Since 1999, employment-based health insurance premiums have increased 12% while the cumulative inflation rose 44% and wage growth, 29%. Employer-based health insurance premiums rose by 5.0% in 2008. In 2007, for small employers it was 5.5%; those with less than 24 workers, 6.8%. "The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $12,700 in 2008 [dollars]. Workers contributed nearly $3,400 or 12% more than they did in 2007. The annual premiums for family coverage significantly eclipsed the gross earnings for a full-time, minimum-wage worker ($10,712). Workers are now paying $1,600 more in premiums annually for family coverage than they did in 1999.... Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115% during the same period. ...The percentage of Americans under age 65 whose family-level, out-of-pocket spending for health care, including health insurance, that exceeds $2,000 a year, rose from 37.3% in 1996 to 43.1% in 2003 — a 16% increase."

The Impact of Rising Health Care Costs

In comparison to Western European nations that have universal health insurance coverage, the US has $480 billion of excess spending per year. These excesses are "mainly associated with excess administrative costs and poorer quality of care," implying there's much waste and inefficiency.

• "The United States spends six times more per capita on the administration of the health care system than its peer Western European nations." Rising health care cost correlates to drops in health insurance coverage, while the cost of this insurance is the main reason for lack of coverage.

• "A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000... 68% of those who filed for bankruptcy had health insurance... 50% of all bankruptcy filings were partly the result of medical expenses."

• "A new survey shows that more than 25% said that housing problems resulted from medical debt, including the inability to make rent or mortgage payments and the development of bad credit ratings.... About 1.5 million families lose their homes to foreclosure every year due to unaffordable medical costs."

The above is paraphrased from the National Coalition on Health Care [last accessed 1/4/09]

To recap—there’s great disparity in how healthcare is transacted, reimbursed, or the extent to which it provides benefit. While this will be discussed more in Part XIV, suffice it to say—we're not getting the bang for the buck. We are unable to reduce the great variation we are seeing in protocol use, clinical method or the quality of care. It is overwhelming even for the most experienced, having to factor in a multitude of independent variables—affordability, coverage, access points, insurability, employment, and so forth. Nevertheless there's hope for the future of managed care as we are trying to redefine it here—an opportunity and it will come to the industry in the form of the great equalizer—Outcome Measurement/Management; let’s call it ‘Management by Results.'

But, wait a minute, reader—Who’s measuring? Who’s managing?

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