Excerpts from Priceless: Curing the Healthcare Crisis
Table of Contents
- THE PROBLEM OF UNINTENDED CONSEQUENCES
- WHY WE ARE ON AN UNSUSTAINABLE PATH
- ECONOMIC VERSUS ENGINEERING VIEWS OF SOCIETY
- HOW MUCH DO YOU TRUST THE GOVERNMENT?
- ACA: AN IMPOSSIBLE MANDATE
- ACA: IMPOSSIBLE EXPECTATIONS
- HEALTH INSURANCE VERSUS HEALTHCARE
- HOW MUCH DOES HEALTH INSURANCE AFFECT HEALTH?
- THE MARKET FOR RISK
- WHAT THE RIGHT AND THE LEFT DON'T UNDERSTAND ABOUT HEALTHCARE IN OTHER COUNTRIES
- HOW THIRD-PARTY PAYERS CRUSH ENTREPRENEURS
- HEALTHCARE ENTREPRENEURS
- CAN ENTREPRENEURSHIP BE COPIED?
- QUALITY COMPETITION
- QUALITY COMPETITION WITHOUT THIRD-PARTY PAYERS
- HOW PERVERSE INCENTIVES AFFECT HEALTHCARE BEHAVIOR
- A SIMPLE WAY TO CONTROL HEALTHCARE SPENDING
- FREEING THE DOCTOR
- FREEING THE EMPLOYEE
- FREEING THE RETIREES
Although we often associate the term entrepreneur with profit seeking, the healthcare field is teeming with innovators who are largely motivated by altruism. Take Dr. Jeffrey Brenner of Camden, New Jersey.16 In any other field, Brenner would be a millionaire, but because he’s in healthcare, he doesn’t know how he’s going to make ends meet. Like entrepreneurs in every market, Brenner thought outside the box. He discovered an ingenious way of lowering health- care costs: focus on the “hot spots” of medicine—the high-use, high-spending patients—and solve their problems with unconventional care.
Brenner discovered that of the 100,000 people who used Camden’s medical facilities over the course of a year, only 1,000 people—just 1 percent—accounted for 30 percent of the costs. He began with one of them: Frank Hendricks (a pseudonym), a patient with severe congestive heart failure, chronic asthma, uncontrolled diabetes, hypothyroidism, gout, and a history of smoking and alcohol abuse. He weighed 560 pounds. In the previous three years, he had spent as much time inside hospitals as he spent outside them.
Some of what Brenner did to help Hendricks was simple doctor stuff, but a lot of it was social work. For example, Brenner and his colleagues helped Hendricks apply for disability insurance so that he could leave the chaos of welfare motels and have access to a consistent set of physicians. The team also pushed him to find sources of stability and value in his life. They got him to return to Alcoholics Anonymous, and when Brenner found out that Hendricks was a devout Christian, he urged him to return to church. As a result, Hendricks’s health improved, and his medical expenses plummeted.
Following that success, Brenner formed the Camden Coalition to apply his methods to more patients. He tells me he can drive down the streets of Camden, point to entire buildings, and say how much the people who live there are costing the taxpayers. By targeting these patients in unconventional ways, Brenner is saving millions of dollars for Medicare and Medicaid. Were others able to do the same thing in other cities, the savings for taxpayers would be huge.
Now for the bad news. How much does Medicare reward Brenner for all the savings he creates for our nation’s largest health plan? Zero. How much does Medicaid pay for all the savings it realizes? Not a penny. In fact, Brenner is able to do what he does only because of grants from private foundations.
Like many other providers of low-cost, high-quality care, Brenner and his colleagues leave tons of money on the table when they fail to practice medicine in conventional ways. Of the thousands of tasks that Medicare pays doctors to perform, social work is not among them. Brenner’s attempts to get Medicare and Medicaid to pay him in a different way have all drowned in a bureaucratic morass, even as Medicare is spending millions on pilot programs and demonstration projects “to find out what works.”
Experiences just like Brenner’s are repeated again and again, day in and day out, around the country. No one knows if Brenner’s techniques can be replicated (any more than we know if the medical practices of the Mayo Clinic or the Cleveland Clinic can be replicated). But there’s one way to find out: Let Brenner out of the trap. How do we do that? By letting him become rich. Rich? Yes, rich. The federal government should offer to let Brenner and his colleagues keep twenty-five cents of every dollar they save the government. Then let every other doctor, nurse, social worker, hospital administrator, and so on in the country know that the government is willing to change the way it pays for care. The message should be: If you can save taxpayers money, you can make money— the more money you save us, the more you earn for yourself. Let a thousand millionaires bloom. Sadly, the trend of federal health policy right now is in the opposite direction. Not only will it not let Brenner out of the trap, it will make the trap more confining. Under the new health reform law, doctors are being encouraged to join Accountable Care Organizations (ACOs), where a federal bureaucracy will virtually dictate the way medicine is practiced.
Brenner, in fact, is trying to get his organization qualified as an ACO. In my opinion, this is a mistake. Under the new rules, bureaucrats will ask: Did Brenner have the prescribed electronic medical record? Did he follow the checklist of inputs ACOs are supposed to follow? Did he manage all of the care—including hospital care? Sadly, the answers are no, no, and no.
It is almost impossible for an entrepreneur to flourish in an environment that fundamentally dislikes entrepreneurship. Fortunately for the innovators, however, patients are paying for more healthcare bills out of their own pockets. And wherever we find health markets dominated by patients paying for care directly, entrepreneurship is thriving.
1 Atul Gawande, “The Hot Spotters,” New Yorker, January 24, 2011, http://www.newyorker.com/reporting/2011/01/24/110124fa_fact_gawande.