Do We Get What We Pay For in American Healthcare?



afternoon everyone hopefully you'll be getting your dose of sunshine getting a screening for skin cancer after that dose of sunshine from the Mount Sinai booth out there and got some food got a great chat for you this afternoon about do we get what we pay for in American healthcare I'm at ol Grover from the Association of American Medical Colleges we are one of the underwriters of this event and very happy to be so and my main goal here today is to get you to turn your cellphone's on to silent please keep them on and keep tweeting particularly if you have disparaging remarks about any of my three colleagues up here but keep them on silent please and and I certainly have no other role in that except to say you've got a terrific panel I wanted to find the joke that began with an economist a surgeon / senator and a psychiatrist walk into a bar but I figured you'll say the funny stuff and talk a little bit about what about all the things that we need to pay for that certainly dr. Davis and dr. frist are familiar with research education training care for really sick people how does that all fit in thank you thank you so part where coming a little bit from the soccer match up here and lluvia in particular I think is struggling he was a bit conflicted and I was there a psychotherapist in the audience that could work with a Yemeni doing okay I'm okay yeah but I don't know if you noticed what a grim face the German coach had even though he won explain it he just went well it's because when you ask a German how are you he will answer it could be better classic something like the health care system I suppose well listen thank you so much for joining us today and and and we're going to talk today about the cost of health care and the questions will we ever get what we pay for as you all know the u.s. spends far more on health care than any other developed nation by a longshot and while the rate of increase in spending seems to have declined over the few years we still spend 2.8 trillion dollars a year and we have issues with safety we have issues with quality ÿû issues with care fragmentation Americans do not fare well on measures of of health internationally when you compare health outcomes and so there's a broad perception that we just do not get what we pay for so today we're gonna explore health care spending and cost the impact of recent legislation and reform initiatives and we will address the question of whether we will ever get what we pay for and if so how so as you can see we have a very illustrious panel here today I'm gonna introduce each of them I'm only going to give sort of the Reader's Digest version of their of their BIOS or I we'd be here all day long so I missed an alphabetical order I'm starting here with dr. Ken Davis ken is the president chief executive officer of the Mount Sinai Health System he also served the deke the Dean of the Icahn School of Medicine at Mount Sinai was chair of Mount Sinai his Department of Psychiatry for 15 years was president of American College of neuropsychopharmacology and as had a long and distinguished career in neuro psychiatric research Fortunes received extensive national recognition Bill Frist as I'm sure everybody knows senator nationally recognized heart and lung transplant surgeon and former US Senate Majority Leader senator frist is chairman of the Executive Council of Christian company and co-chair of the health project of the bipartisan policy center as majority leader of the Senate his leadership was instrumental in passage of the 2003 Medicare prescription drug improvement and Modernization Act and and PEPFAR the President's Emergency Plan for AIDS relief dr. Ruthie Reinhardt is the James Madison professor of economy at Princeton University he is a leading health policy expert who has advised various state and international bodies including the World Bank the physicians payment Review Commission the Department of Health and Human Services is a member of the Institute of Medicine and has served in the board of Duke University in numerous other health system he's widely regarded as the world's funniest economist here's a stand-up act in LA you really shouldn't miss it so I'd like to I'm gonna start the conversation by posing a few questions to these gentlemen but I'm gonna do this we're gonna do that for about thirty minutes and then really going to go to the audience to handle your questions so so start jotting them down and and we'll try to get in as many as possible then I'll come back for about five minutes of a wrap-up so I'm gonna start with you've a um you know as I alluded to in the intro there's been a great deal written and said about the fact that health care spending appears to have slowed down or the rate of increase as Pearson slowed down over the last few years and this debate is – is it the recession is it structural factors and you know where do you come out on this and and where do you lay the most if it's structural you know what's what's really driving that ISM is this gonna keep going is it gonna you know slow down or what are we looking forward to here thank you first of all I do want to observe I seem to be the only doctor here with a PhD which our daughter who has an MD says daddy PhD is Greek for a doctor who cannot help you but I will now break the must be eighteenth Amendment of the US Constitution which means you must never question the American exceptionalism and just in today's JAMA is a paper that shows that the spending dear the decline in the growth of spending in Europe matches ours pretty much exactly in fact when you take the difference between growth and health spending and growth in GDP we call that excess spending that's the name for it of the US and Europe the two curves almost coincide so obviously in my view that must mean the recession had a lot to do with it because the Europeans didn't raise deductibles didn't do bundled payments didn't do any of the things that we did and their decline is very similar to ours I think the recession had a lot to do with it because there is a fairly tight correlation between GDP growth and health spending growth although health spending lags a year year-and-a-half behind that but we did do other things in the u.s. I think the great sleeping giant the employers are finally waking up before say before the year 2000 an employer they paid every check from health care that came their way often it meant they actually paid the invoice number the first number they saw Bank that cut a check I think those days are over now they bestir themselves in various ways a by raising cost-sharing on patient with deductibles coinsurance or not covering things they used to cover but I think they also bargain more harshly with the insurance industry so that is one piece of it Peter Orszag yesterday pointed out that Medicare spending growths had abated many years ago and he believes this has nothing to do with the recession I would disagree with him in the following way if the eh-eh-eh-eh the American Hospital Association goes to Congress and pleads for hire updates higher price increases in a recession Congress has a much better position to say left to do it for you dick but we have unemployment insurance benefits we have more Medicaid people our budget is tight can't give it to you I think it's easier to do that in a recession to tell the AJ to lie low and the physicians then when things are booming so there is a recession connect but I think if economic growth picks up again in the US there are two things you have to keep in mind the first one is economists measure everything by averages average growth of GDP this is a really not very smart fact it is quite tragic in the 1930s the entire Harvard economics and round and what happened they had a picnic and there walked through a lake lake that their new on average was three feet deep this this is classic economics if you take picot ease work and say take the top one percent of earners out of our society and do the same with friends we actually for the 99 percent average GDP grew less rapidly than France and in the future will grow less rapidly than GDP that you see in the headlines so I don't think the typical average American is out of this recession we're facing slow growth so we will not have what we had before with was GDP health spending grew two percentage points faster than GDP you'd be lucky to get a half a percentage point differential so the question so first of all if it was my economics professor in accounting and in micro or macro finances two or 30 years ago so our relationship is a special relationship so all first of all that was brilliant all that because it really was a structural of all this flattening is it 50 percent structural and fifty percent recession or give me a number boy I would never say yes 50 well no no I would say 38 percent versus 60 what which is that doesn't matter so much as to say you never give even numbers that means you're thoughtless sturgeons resync simple we just round everything I know the economists I coronary artery closure it's sort of you know kind of but roughly happened I don't know I would say probably sixty percent was the recession and 40 percent struck so again question your so so so bill so Affordable Care Act we've we've sixty percent is this may be the recession the slowdown now we're ensuring this year you know eight million new folks and next year more and so forth and so on and know we're gonna and that's a good thing but of course when you do that you decrease barriers to access and more people will have access or we are we gonna see a cost acceleration here and does the ACA have minute built into its sufficient levers to pull to constrain cost growth as needed no okay the Congress an old joke about economists know everything about pricing but nothing about value right right okay so I the Affordable Care Act and most of you heard I'm Republican and all that and but if the center of gravity of it is it's a good not a good bill but a good effort a good initiative that I'm glad happened and the thing is it's an access bill and I know everybody not say no it did all this other stuff but at the end of the day it is an access bill it is not a cost or a even a spending bill it's just not and the quality there's quality in there and there's a countable care organization we'll get to that and all in there but if you step back the purpose of its insurance reform 16 million people in Medicaid 16 million people are the uninsured in exchanges that was the way it was written that's the way it was intended the cost and the spending issues and we'll talk about some of the initiatives because the demonstration projects are good they take a long time to see the results from they probably incrementally accelerated the reform that was going on in the private sector anyway but it took it up a notch the curve probably still with the same slow but if you look at accountable care organizations and and will really get to the expert on that is there 150 of them out there on the federal registration it's integrated health care continuity over time you get everybody in a room and you deliver care instead of the fragmented fee-for-service that's kind of what an accountable care organization is so the federal version of that there are a hundred and say 37 if you had to pioneer and and and the other together to date and of those only about 40 percent showed any savings at all at a year years not fair but that's the data so far and of those only probably 16 or 17 of the initial ones were able to share in the cost savings model now he'll tell me and everybody that's not good enough data but that's the data that's out there the grill the real excitement about it is the incremental step function of sort of saying integrated healthcare with continuity of care over whether it's bundling or a period of illness is a good thing and the Affordable Care Act is he talks about it does a little bundling and in all which is good stuff but in terms of being a bill its purpose was access it was not cost and not cost savings in fact you can end up spending about two point six trillion dollars over the next ten years more than you would otherwise 2.6 dollars so for all the increase so kind of want to come to you Ken you run a healthcare system a big one in New York City and you have a population that is underserved in general under in short I would I would dare say even with the ACA probably and and you're also an academic medical center a cost of research teaching so forth and so on what does this all mean for you because again back to the average thing not all medical centers and systems are the same you occupy unique strata in American medicine as a academic health center and I just want to under get your perspective on what the future looks like for you well what's to say about this and I've start I want to start by commenting on what my colleagues have just talked about although like them I conceived the ACA as largely a bill about access I'm surprised at what are the trends that are happening in healthcare now some stimulated by that bill some stimulated by other factors that really are changing the utilization of hospitals I mean I see it across our seven hospitals I see that the number of inpatient admissions is significantly down I see ambulatory care is significantly up so utilization of the most expensive services is changing now whether that's in fact because of the readmission penalties or whether that's because there's more managed care from Medicaid or that's because ACO like organizations are creeping into some of the insurance products or we're all getting ready for what we see is the inevitable change as we move away from fee-for-service to taking risk and population I think there are trends that are going to decrease cost over time but what we've alluded to but haven't yet I think elaborated is that the demographics of the United States work against healthcare economics being you know more more austere it's clear that as my generation ages and we develop all the chronic diseases that we do and we prolong life as we are that we're gonna have a lot more expense and we have to deal with the fact that this generational problem has to drive health care costs and even if we're much more effective and much more efficient that demographics is the tsunami I think I think that's right but we I think we'd all agree that 20% of the healthcare dollar today is wasted and I think that much of our folk if we're looking for value and what talks a little bit about what value means but but at the end of the day we got in an efficient system we can do a lot better run I would argue that the affordable care act and that's not the purpose of this panel didn't provide the purpose was not to provide the answers to that and but it was more the access issues so one of the ones it on this point I happen to have a number you have a slide no no hold that up no I know the Institute of Medicine had a publication about two years ago best care and lower cost and they had an estimate of waste in 2009 unnecessary services 210 billion in efficient delivery hundred thirty billion excess administration one hundred ninety billion and it goes on the total is seven hundred sixty five billion which is thirty one percent of the 2.5 trillion now you could argue about some of these items but you know you made a twenty percent yes yeah they're made of twenty one but again but it's it's certainly a number in the north of 20 percent but let me speak to that for a second because one of the little known aspects of the ACA is something called administrative simplification which is supposed to be around the corner now what does that mean let me give you an example at Mount Sinai we have two hundred and fifty different health plans that we deal with consider what that means two hundred and fifty different health plans so everyone has different rules everyone has different denials different claims processing different claims form it goes on and on and on it takes an army of villers to take care of that and then there are the denials then the repeat appeals and it never stops the question is how much administrative overhead have we built into this awful inefficient dysfunctional system and how much is it costing us other IOM reports estimate that to be about ten percent the ACA is supposed to address that I'm still waiting for it to happen so administrative simplification he taught me and everybody we're probably twice as bad as in any country in the world in terms of percent whether it's 10% or 6% which is what you used to tell them you were 6.2 percent used to tell me there's there's a lot it can be done but it's a good example the Affordable Care Act has an administrative administration simplicity or simplification and there's six provisions in there it takes effect here in about two weeks so we don't really know but it doesn't even attempt to address really it'll go from six point two to six point one percent but this whole idea of administrative simplicity in the old days when he was still in Germany and he first taught me he would said single-payer system right around my fee would have said really but I used to say you'd say you know single-payer system or whatever but now we've sort of gotten away from that in our the beauty of our system in many ways are all these plans that are out there maybe not two hundred it should be five but the fact that we do have some choice and the fact that they're out there and is that administrate some of that administrative expense just part of the compart of the complexity part of the expense that we pay to have a pluralistic system that's good yeah yeah we just shift gears for one second I wanna because I think this is important this has been in the press quite a bit recently you know Gilead just came out with a new drug Salvati I think it's called it's a cures hepatitis C and it costs eighty four thousand dollars for 12-week course of therapy huge uproar about this now the question is you know are we getting what we pay for here and what if there are many more drugs like this will we even if we are can we afford it and and so how do we tackle this how will we know if we are getting what we pay for and how do we value it and I'm gonna start with you you came you've done you spent a good time the developing pharmaceutical products so your perspective on that so my perspective on this may be very different from my friend the economists perspective on this I know you can make a business case in an economic argument for why they should charge eighty two thousand dollars or whatever they charge slightly five right eighty two point five but I'm also a health care populace and an academic elitist and from those perspectives my my thoughts of these imagine if the polio vaccine had been priced at the savings downstream for health care imagine if the first drugs that treated tuberculosis charged what they thought was the savings as we close tuberculous sanatorium I don't think that this is the appropriate business model now I'm far from anyone to say I'd like price controls I'd like some panel to figure out what this is but I think in a cleric in a democracy like ours in a capitalist system like ours I think there has to be responsibility by the individual and the corporate and that responsibility says I'll set this at a fair price to return on investment not an obscene price so let me ask so I asked you BAE this question this morning I didn't understand the answer but maybe when he says it to you you'll understand it so so obey how do we get at really how we'll know whether we're getting what we pay for I mean what I mean how will you how do you answer the question let's you know how to measure it or assess it or you know how will we will a bell go off what will tell us that we're getting what we pay for well there are several approaches as you can imagine to economists three opinions and here you get one and to give you two I don't know it's try and Brennan in the crowd he has a paper coming out he works for CBS he's the medical executive vice president for medical affairs and he has a paper coming out soon on this issue one approach is to say what are we spending now take that as a baseline and then if we use so Valley would that be cheaper and I think you will hear and find on that basis it's actually justified even at a thousand although again you know mean by now I would have priced it $8.99 would have been much less media brouhaha thousand journalists lechon to– but it's probably cost-effective but Ken's question is also a good way to think about it because there you you really ask how much should you ask taxpayers to pay taxes to buy an extra life here for someone they don't even know and that's a quite different question and we don't have an answer for this because you cannot this you could only discuss that if Sarah Palin and Betsey McCoy we're having government finance sabbaticals on st. Helena then you could probably have a discussion on this without being called a Nazi because that's what happened here they accuse our president of being a Nazi so to speak you can't have a discussion like that but that is what Ken is really talking about should it like for example in terms of entrepreneurship how if they had priced it at $500 a pill just hypothetically they bought the company that makes it for 11 billion and I think at 500 their revenue would be something in the neighborhood of 125 billion and in it must be enough profit for an entrepreneur to be incentive to invent and and we need some discussion on that and I'm glad you don't you raised it but I can also see the economists who say look at the baseline look at what this will cost this will probably cost less therefore it's a better deal than doing what we now do and that's how their price I want to know because I know you've been a strong advocate for the consumer being the arbiter of value and how does the consumer voice work into this and how do we empower the consumer in the role of moderating price in the in the healthcare system I opted amidst ik about the future in health care and even healthcare prices and the access issue and I think it's gonna in large part be driven by by having a hundred million people shopping versus 535 members of the Congress setting prices of what a doctor is reimbursed on a visit or telling you for Medicaid I'm gonna give you 60 cents on the cost of your dollar and then dumping another 16 million people into a program that he's getting what eighty percent eighty cents on the cost yeah it doesn't make sense and so we can and again the Affordable Care Act didn't even attempt to when the purpose of it so I'm kind of defending it now the purpose it wouldn't address sort of the health care system it didn't change really anything the real the real power we're seeing it with much higher deductibles this trend over the last five years of going from $300 deductibles to 2002 health savings accounts to the empowerment of individuals the individual today and the doctor-patient relationship which is where I operate mainly to have a consumer a patient come in and for the first time say is your colonoscopy what is the and three years ago I couldn't answer that or what is the charge what does it cost two different issues but what is it but then if the next question is why in San Francisco is it is it eight hundred dollars two blocks from here and over at the academic Health Center nine times that it's seven thousand dollars the question from the consumer you say about everybody in this room doesn't have to be smart consumers but if these two tables are smart consumers that drives me the provider to change for everybody else it as me all of a sudden the doctor or you who runs the large system to say it really doesn't make sense so when you empower the consumer with the information in which very much the last two days have been about this flow of data in big data and what are we going to do with it and that the devices that we have and what we can tell is going on in our own bodies I got my EKG in my pocket now and I'm wearing my steps and I see you get empowered with the way we're with a couple of clicks now we're just getting to the point to look at the price transparency differential we're probably two steps behind in quality and we'll come back because quality is tough human biology makes quality tough the fact in each bit each cell in my body I've just knocked off a hundred thousand cells there's 3.2 billion bits of information in every cell that just I knocked out that's human biology so it's hard to put quality around them but you put all that in the empowerment of the consumer today with price and hopefully sort of transparency coming very quick Heal the next three years with the information the knowledge driven economy that we're end and then you couple it with a financing system where you're making me responsible where my decisions say I go for $800 where I go for seventy two hundred dollars I'm hugely hopeful a long way from where I said as majority leader of the United States Senate trying to write legislation that's dirty that's messy that's never going to accomplish it's too static to be able to stay as flexible as dynamic as we need to be but this was a very subtle point you made I hope you learned it at Princeton all that hard work which was in a market if a provider really hurts when they lose 10% of the clients you don't need more than 10% of savvy buyers in the market to make that market work well in other words not everyone has to have a computer and all this stuff as long as 10 15% alert and can hurt a provider who over prices you will have the market and that's that's why when people came to me with the Medicare Modernization Act in 2003 they said seniors are not smart enough to be able to shop for the prescription drug plans people came to me and said you can't pass this bill and we passed the bills the Medicare prescription drug bill they put plans out there they compete one to the other and sure enough because but it's a nursing home assisted living you had your 10% sitting there and all of a sudden everybody became smart consumers yeah yeah you touch on something I want to ask Ken about you know in health care typically whenever we introduce a new technology seems to cost more money than save it's sort of different than most other industries but one gets the sense we're on the precipice of something very different these days and you know with the mobile revolution the digital revolution that the inability to be connected 24/7 in theory to your provider and upload all sorts of sense you know sensor data and and you know journals and Diaries of what's going on it it seems like the whole definition of access and your be able to monitor patients is really changing in an era when chronic disease is really important to get our arms around enough can I just you know what is that am I am I sort of being pollyannaish and over-optimistic about the potential of this or do you think there's something really there no I think there's something there we've talked a lot about personalized medicine we talked a lot about genomics I don't think that's going to have the influence that apps will and some of the things that we're gonna be wearing that will monitor our health metrics let me give you some examples we're sitting down with Google X and Google X is going to be working with us around a whole bunch of monitors that they can put in patients just from an armband wristband and a contact lens so we'll be able to monitor your oxygen saturation your glucose levels your ek your blood pressure your pulse on and on and on the problem isn't that we can't monitor it the problem is imagine how much data that is it's an overwhelming amount of data so we've already been thinking about that and for our genomics projects and our epic electronic medical record of course seven hospitals we have built a supercomputer it's so big it has its own name it's called Minerva and what Minerva does it sits around and crunches data all day so what we're looking toward now is developing the algorithms that will be able to identify the risk factors that are happening at all those metrics as you monitor them and then send an alert to your iPhone or whatever cellular device that you have or a push message that says get in touch with Mount Sinai and we'll have the number and then we will facilitate they're quickly getting care now I think that's going to be the future all the technology is there the problems are all engineering to solve it that can decrease cost because as we move away from treating illness and more toward prevention that's how to prevent that's how to prevent those hypoglycemic episodes or those really bad diabetic problems before they occur the EKG problems before they're really serious lots of good possibilities here but how do you get paid that's a problem you know and it's a particularly problem really problematic as my colleagues demonize health care centers because there's a reason why some hospitals have a seven thousand dollar charge and others have a nine hundred dollar charge and it has nothing to do with these evil people like me who is sitting around thinking they won't know we can really get them it's not that way at all I mean what happens is these are charges on a charge master that nobody pays the only people who pay this are utterly uninsured people and for those at least in our Hospital there's a sliding scale that relates to your ability to pay so this is a bogus argument at the end of the day the question though that whoíve raises and he raises appropriately is what would happen if we had reference pricing how would that begin to change the whole nature of the negotiations that we have with the United with an Aetna with Oxford with all the insurance companies that then create these funny charges that we have so well I'm gonna ask one last question and then we're gonna go to the audience so move it just to just change gears a little bit again so huge consolidation going on in American health systems as as as large systems buy up how you guys have acquired a number of hospitals and and really it's you know it's the drive to manage population health I'm sure that you see coming down the pike that's driving this because you gonna have to manage risk but from an economists perspective do you have a concern around the kind of consolidation that's going on and sort of local monopolies being created and having real dominant weight in the in the market that you'll eventually drive up price in that yeah I mean economists see both the virtue the potential economies of scale integrated care more value for the dollar but on the other hand also concentrated market power so even if you had bundled payment the bundle may cost you a bundle and that's really the the problem so the Federal Trade Commission is very focused on that Martin Gaynor and economists there watching is extremely carefully so economists with a cos it really have mixed feelings the way I deal with it on even-numbered days I think it's actually a good thing etc odd-numbered days are worried about the market power and pricing and we've seen it there's a lot of research that shows where you have highly consolidated hospitals and less consolidated insurance prices are much higher please yeah this is a really really important point I think the reference based pricing well it comes with you know what that is but everybody the first I reference based pricing is like a reverse deductible right now if you have a deductible thousand dollars you pay up to a thousand dollars after that you're Scott freezer you're not a very smart consumer it doesn't matter because somebody out there in space is paying for reverse a reference based pricing is a little bit different and now that we can measure quality a little bit better you can do it and basically it says that there are four centers in the area that you and you can choose and go to anyone you want to based on your app and your information and that's good but if say colonoscopy is gonna cost more than a thousand dollars if you want to go to a and it's a thousand dollars rate under here's your thousand dollars if you want to go to B because it's got some hotshot doctor over there instant cost $1,200 you the individuals responsible for the two hundred dollars or if you want to go to a place in four hundred dollars and so that's what reference based pricing it's like a reverse deductible and I think all of us would agree it's used everywhere else in America in the markets it's rarely rarely rarely used in the health care sort of call spending market world and I don't need to say a lot more about it but reference base price you might just comment and you as well it it's a big deal yeah what did you want to jump in earlier was it go ahead you probably heard Dena bravado of Castlight she was on this stage in fact and they facilitate reference based pricing and applied it to hip replacement and knee replacements where they basically gave the employees a price list here these hospitals and here their prices that's what you have to pay will give you $30,000 and here are the hospitals that do this procedure I think Cedar sinai was one of them was actually in the mix and they have to look at quality but they do they also have quality data and so if you go to any of those they'll do it for the thirty we gave you if you go to one that charges ninety thousand and there were some you paid a whole difference out-of-pocket they introduced that and I think within two months the prices of the hype Flyers collapse closer to the reference price so it's a very powerful tool to marry social solidarity up to the reference price and then play raw market now I could imagine Ken would be frightened of this but maybe not other things and one of the things I'm frightened about is your comment that on odd days you're not sure about whether this consolidation is good even days you think it's good let me tell you why at least for now at least in New York why this was good hospitals in New York are often social mission driven hospitals you don't have a lot of hospitals that aren't doing obstetrics Pediatrics psychiatry and in the system that we have we do 18,000 deliveries a year lose money on everyone we have 500 psychiatric beds lose money on all of them how do you take the macroeconomics of health care in which the employer can't afford health care the government feds can't afford health care the state can't afford health care how do you develop a more efficient system everybody wants to take 20% out of the system where are we gonna take to 20% of the system well one of the ways you do it is you don't have a pediatric ICU in seven hospitals that's what happens when we consolidated another one did you do it is you consolidate all the psychiatric beds in one place another way that you do it is that one of our hospitals which was doing 20 kidney transplants stops doing them so that the other Hospital which is doing 350 kidney transplants does all of them now the communities get upset when that happens and sometimes politicians cave in and they say oh we got to keep it open how can we not have a pediatric unit how can we not have a psychiatry unit but if we're going to save money we've got to start clinical integration and then we have to have that corporate integration that works with that as well otherwise these behemoths will be as efficient as they've ever been and my fellow panelists in the next couple of years are gonna continue to demonize the hospitals at the same time that they'll be worried or the FTC better I'll let you guys consolidate I think you're by the way I think you're a great guy so now it's time to go to the audience it's time to go to the audience and first hand up is out in the corner back there this one's for professor Huey I had a chance to ask Thomas Piketty last week last month what you just what you just mentioned what happens if you pull off the top 1% what is he seen in his trending in terms of will say economic prosperity for middle class income or middle class income earners can you take that a little further into adding on the quality of health care and how it's increased over the last 30 years in that timeframe and putting it in any kind of perspective on on whether or not it's gotten better it's cheaper for people overall in terms of what we're getting compared to 30 years ago or as he walked away from me and didn't answer the question but you answered today is there no correlation and could I just ask all our panelists let's keep our question because I want to get as many in as we can so yep well actually the interesting thing is I think you can measure cost which is hours per unit of something either cost per treatment or cost per unit of output take for instance Heart Care coronary care the cost per unit of output say additional life years actually has gone down substantially over the years so for the money in in Heart Care Americans get more but if you look at cost per treatment that's gone up this very confusion confusing but you really have to think do I measure caused by inputs or by output if you do output American healthcare in many areas has actually gotten cheaper because you you're getting more the problem is that for the average American family if you look at Milliman Medical index it costs now $23,000 per year for family of four for healthcare the median income in America is 50,000 family income do the math and see how that works how could those families was making less than 50 pay for a product that costs 22,000 without us in the upper income distribution subsidizing them with tax money that's the big dilemma yep next lady right there so what happens to the doctors do we still have doctors who want to go to school are they going to make money I'm kind of you know talking about all the data you're gonna collect and you can subsidize and make different things happens but what happens to our young people are they going to go out there and say is it even worth to school anymore oh you need to answer it you got it I'll set you up because this is Doug this is critical and this is that where the academic health center and I think it is very important for this audience don't go in the details about academic and what it costs to trained not just a heart surgeon primary care doctor I was in Rwanda five days ago and there's a woman there 40 years of age an orthopedic surgeon a specialist out there which he decided to dedicate two years of her life to serving people around the world service-oriented I pulled her aside and she said I'd I asked her how much we have in loans at that age forty years of age after working harder even a specialist but development service has two hundred thousand dollars in debt today anyway what is how do I would basically say the role of academic health centers in training is huge in its at risk at risk we train 2,000 residents we receive payments from the government indirect and direct medical expenses that we get per resident it astounds everyone to know that as much as we are paid it still doesn't cover one of the real costs and the subsidies that we have in the Medical Center the academic medals that keep it alive but the question that you raised I want to address in a slightly different way which is the young person who's going into medicine today who thinks they're gonna be kazillion heirs making a big mistake they've got to go into medicine because they want to heal they want to relieve suffering or they're scientists and they want to find a way to develop the next generation of therapeutics or understand pathophysiology but if we make the barriers so high because the expenses are so great and their indebtedness is so huge and we can't find a way to relieve that we're gonna have a hard time getting the best people to be in medicine wait we can't let's go go what yeah let's go to another anybody over here and deciders is on the side back there way back there wait wait wait for the mic you've mentioned today alternative payments such as bundles and a cos how about just death to fee-for-service one executioner pay for service over the next three to five years well it will die and it is they'll always be markets and W plastic surgery and they'll be LASIK you know but but at the end of the day that the movement and from theoretical people to policymakers to practitioners people understand we're going to move from a volume base coming back to what movie said from a volume base to a value base so the discussion is about how you define value which is what we're talking about from a fee-for-service to a value-based reimbursement and and it gets you away from all the ten thousand codes which I as a legislator would have to put my stamp of approval on which are really a hundred and ten thousand codes today gets away from a lot of that and allows ultimately he says does bundling itself where the decisions made instead of at the macro level at the micro level where the people are doing the heart transplant you have the social worker the heart transplant surgeon and the pathologist the perfusion is all together and having the allocation of resources and a bundled payment there instead of paying each one fee-for-service for every interaction so but it's pretty much accepted by everybody we're moving from about from volume to value it's it's very complicated in this sense you have it's supposed to be evidence-based bundled payments so you first of all have to have physicians agree what is the proper treatment for this condition and does it have a beginning and an end like a transplant first we have to you know that means making eagles fly information never easy supposing they agree then you have to price out the bundle and say well here are all these services and we have to put a price on them and then you add it all up and you get the bundle now somebody has to get the bundle and then pay all the others who participate in it so you need an organization that can do that and that's where the ACO comes in normally i mean the idea that all these doctors meet in a Holiday Inn Saturday morning to divvy up the bundle surgeons with their knifes there I don't think you need an organization I do a heart transplant and I've had my team there and I do it through the through the hospital itself and so we make an agreement but basically the hospital or the head of the team gets up to hundred thousand dollars and then after that the decisions are made so it can get complicated but it can be very very simple and for joint replacement for anything that is as you said a beginning and episodic we can do it the hard thing is or the chronic disease which is where the real problem the real challenge the real money the as we all know we're moving the quantities that becomes much as you said harder to do but can I ask you a question supposing you had a coronary bypass all right that's sort of beginning and end but depending on the comorbidities it must cost different amounts of money so you have to risk adjust the bundled all right so and that's anyway we do stuff for years but it's on its way okay who else gentleman back there and just say who you are and who you directing your question – well one pick one well you eat you eat so how do you how do you pay for the follow-up care because everyone knows that a good result is only as good as the follow-up the longer you've everything's a function to the x-axis the longer you follow up outcomes deteriorate know the bundle at least the way we are talking about it should have follow-up care in it it should be large enough to pay for the follow-up care because you have at some point to draw a line and say from then on it's a new episode and that's part complication but I'm sure somebody like Bill could figure out what that would require okay in terms of follow-up how much that would cost that's probably not even the most we can deal with that I think all right next questions lady right here I set your name and who you're sure my name is Anne O'Brien and my question is if you take the United States out of the equation for a second and you look at all the other countries of the world which country do you think has the best although it may have its own flaws but the best health care system when you look at access total cost both public and private and then outcomes cause I think if we don't let they answer this very upset I would say Singapore right now I'm in Germany I think those are the two best models for us to look at I might have thrown in Switzerland it's a little more pricey than Germany but high quality very good quality cheaper than we are by 30 percent cheaper that you know that would be a lot of money I think that the point is and I'm gonna just throw in because I think it's a great question but it goes to the panel's yesterday our delivery systems now which are very doctor centric we're getting away from it any academic places are getting away from it the way they're training doctors more team-based approach to have a pro people at appropriate training and certification doing services instead of heart-lung transplant surgeon you know down there things that other people could could do I'm just gonna throw out there that we have a lot to learn from the developing world we have a lot to learn from Rwanda Rwanda where I was where vaccination rate is 94 percent up to the age of 18 where we're about 30% vaccination wage rate which is all the things we've talked about today in terms of cost saving burden disease prevention is by far number one and it is cheap the United States fails and I just throw it out because people ask me all the time why I go to Bangladesh and why I go to Haiti and these community health centers where you have community health workers they don't even have to be trained and certified but they can do a whole lot that we have America because of our scope of practice because of our protectionism as physicians because of our state licensing prevent we're gonna have to blow that wide open in order to get rid of this inefficiency ineffective use of resources today because of our scores scarce resources going to demand it you know we have to be careful when we make these comparisons because part of the differences in our system is a country like Switzerland and Germany have a lot more that they spend in their welfare state than we do as much as we complain about it the social safety net is a lot more supportive there than in the United States additionally the kind of drug problems alcohol problems vehicular accident problems guns problems that we have violence in this country changes our mortality socioeconomic sociodemographics safety net lacunae and all those issues make the united states different right here in the middle thank you thank you very much for a very stimulating panel the question is we've been talking about this for who is this for howdy directed somebody the smartest one I'll take it what we haven't talked about regulations that we talked about all this great innovation technological innovation but we have some serious problems with HIPPA regulations about very sequestered healthcare information how do you see breaking through those barriers that will allow this casual interaction where you're collecting a lot of data making decisions about that data I haven't heard that discuss today it's really good question because he goes to the big data question in fact we have more data than ever and we will over the next six months compared to the last 20 years it's unbelievable and it's useful data and we need put apps on it to be able to interpret them so hip I was part of the legislation itself is the late 1990s it was legislation late night and I say 1996 to 1998 when HIPAA was put in it's basically privacy protection it was a recognition at the time that your medical record was floating around and a hard copy and that anybody had access to it anybody asked for it could go in a hospital and pull it off the record and that is wrong the challenge with HIPAA right now is that it was before the digital age right now we've only had iPads now iPads weren't only invented three and a half years ago the iPad itself and so it was before the digital age long before it and therefore it needs to be updated I will say and I'm not as current as many of you in the room the recent update the last six months of HIPPA regulation he's fixed a whole lot of that and we might hear from somebody but the the spirts who tell me when I question it the other thing is this whole regulatory burden that is placed on individual physicians and encounters where we started in terms of administrative expenses is a big deal and the simplification I would argue that the the government of role is is one of establishing an ethical framework coming back to make sure that we have the appropriate distribution going on that we have the safety and sort of efficacy of drugs to the FDA once the track is set the government is going to have to get out of the way sort of monitor oversight but the day where you can write HIPAA is the day that's gone by because things are moving so so so so fast and so we have to be very careful but regulatory reform is a big part of what we do I think for hip it's less of a problem today than it was six months ago it's it's a problem I mean as we begin to think about information exchanges so that any hospital can reach any other hospital about somebody's medical record it becomes problematic I mean if one of you in this room gets really sick and your healthcare medical record is mostly in say New York or Los Angeles and you wind up in a hospital in Denver it's not gonna be a push of a button that's gonna get all that stuff to the Denver hospital it's not happening they're gonna have to call up they're gonna have to find out what the information is it could take time it could be wrong there will be excess tests done that are unnecessary we really need to figure out how to exchange this information in a way that still preserves confidentiality and the protections that people want around their privacy is your compliance Department too big yeah because I serve in the Duke board and we had close to 15 going on 20 full time people just making sure we were in compliance with federal regulation you go to other country and I always asked the CEOs how big is your compliance department I said compliance what is that they don't actually write have this so one question that I don't know how to answer is why do we need so much regulation like compliance which sort of criminalizes we I wanted to sound like a Republican well what's going on is it harder wisdom a harder public is a harder heart all right right here this gentleman right here is very good he's not really good I have a question about the influence of the informed consumer do did I hear correctly that only 10 to 15% of you know of the technologically connected need people need to be technology can get connected to influence a market yes is that sounded like a rounded number can you elucidate a bit on that like what but no the the argument is as long as they're enough buyers to hurt a provider they will cotton to them and take cameras for example my colleague Mark Pauly always points that out when I go buy a camera I didn't have a clue I don't even know how they work but they are people to make that market really work and I think in healthcare it'll probably be that way too and as you pointed out with the Medicare Modernization Act it did work out that way drug prices did get controlled and most elderly don't actually are not computer savvy or do all the stuff theory says they should do as long as you have a vigilant minority your vigilante minority Virgil ante yeah so if I'd like to sort of wrap we're sort of close to the end of our time I just like to wrap up with with one last question for each of you and if you can keep your response about a minute that would be great so when I was a young medical student back in 1981 and I did my senior thesis on the for a public health course there on the unsustainable growth in health care now here we are 30 years later and we're talking about the same topic and you know the things sounds very very familiar if we were to come back on the stage ten years from now would we be having a conversation and if so what would have changed between the single most important thing would have changed between now and 10 years from now to make that conversation different do you start I think in 10 years what we're going to be thinking about is how come my care was denied because as we move to population management and we begin to connect providers with payers there is now a new relationship the provider and the payer want to diminish the amount of care that people get now we know that there's a lot of excess testing a lot of excess care and it's going to be ultimately a good thing but as we move to population management the criticisms are going to be not that that $9,000 hips should have been $7,000 it's going to be I should have had a bypass and they kept giving me status no ten ten years from now we started the Affordable Care Act the three years ago down with about forty to fifty two million people uninsured the problem with that the people are insured on day one six months later aren't the same people there's a product of that the best estimates by the administration today are that ten years from now we're going to still have we started with 42 to 55 we're gonna still have if everything goes perfectly we're gonna still have 32 million people uninsured so the access issue even though it's going to kind of be off the table at the federal level now because we dealt with it no one wants to touch reform at the federal level if the state level with increased flexibility of Medicaid and hopefully going to move in that direction we'll be able to address this we don't have the answer at the federal level the state level and the local level in the community level or where most most healthcare solutions are going to be ten years from now we'd have 32 million people uninsured the GDP percent GDP will be about 18 percent I have no idea really but progressive growth where was when when you and I were in medical school it was around 6% now it's 18 percent I think will flatten over time and I think the driving force issue that changes it is this nexus of information technology big data the informatics that big data allows coupled with the drive to consumerism of 200 million P or maybe the 10% of them 200 million people making decisions instead of 535 people in Congress movies making faces he looks like this it looks like who's the coach from the German Sergei has learned 18.3 now I remember this brings me back in my very first public speech was in Washington I think 1976 and you know my wife I wrote it up laid it out showed it to her and she looked at it and said it's complete nonsense and I was very helpful what's wrong with it and I had all this what we must do to control costs because we economists were convinced if it reaches 10 percent America ceases to exist so she says have you ever been at a truck spending conference or for that matter how much we spend on alcohol and in those days we were spending more on alcohol and tobacco I think then on hospital care and so on she totally trashed my talk so I gave and I didn't go there with any talk the night before I had a couple of scotches and just listened and then ran down everything I heard and it was actually a very successful I think the so it we're now at 17% one reason we tolerated is the health care sector is the greatest creator of jobs the bulk of jobs in America where health care yesterday Peter Orszag said GDP is down and the reason it's down because health care spending in the first quarter was down Healthcare drives our economy in a major way so in some regards on the one hand we curse health spending but at the local level try to close the hospital it's your your employment but I think the debate what is it 10 years you said from now 10 and a half I think we will have shifted from just raw we must cut health spending – what are we getting the theme of this session and I believe given what we discussed that we don't have to know what a life year is worth in dollars in America but we do know that we eliminate some of the waste we were talking about we will get more value for the dollars all you need to know at this stage because we know of all the waste the IOM study and so on and I think we will be debating more of the value question unless just this we can't afford X percent imagine we spend 30 percent of GDP on healthcare we got rid of Alzheimer's of cancers and had a viagra pill that lasts 50 years now you might take that bargain is right for 30 percent you know I would it's a good deal that's a good deal that's good well you know I want to thank our panelists but before I wrap up I'd like to let everybody know that that movie's gonna be playing Vegas or what July 4th weekend and you can catch him there so if you're catching be sure to catch his act so once again thank you very much great conversations have a applause for panel thank you

1 comment

  1. Good panel, this conversation included some very interesting ideas, interspersed with some pretty bad ones. For example, voting with your wallet by choosing which health care plan to pay into, as opposed to voting with your voice, as in democratically choosing an elected official to put price controls.
    Overall, an engaging exchange.
    Edit: The more I listen to William Frist talk, the less he says. Very typical politician with an idea to sell/force down the throats of people.

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