PHILADELPHIA REFLECTIONS
The musings of a Philadelphia Physician who has served the community for six decades

200 Topics

Obamacare: Examination and Response
An appraisal of the Affordable Care Act and-- with some guesswork-- its tricky politics. Then, a way to capture major new revenue, even paying down existing Medicare debt, without raising premiums or harming quality care. Then, an offering of reforms even more basic, but more incremental.

(www.Philadelphia-Reflections.com/topic/134.htm)

Old Age, Re-designed
A grumpy analysis of future trends from a member of the Grumpy Generation.

Right Angle Club: 2014
New topic 2013-11-19 20:22:11 description

Quakers: The Society of Friends
According to an old Quaker joke, the Holy Trinity consists of the fatherhood of God, the brotherhood of man, and the neighborhood of Philadelphia.

Obamacare: Spare Parts for a Book
Maybe these should have been included, but it was decided to leave them out.

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Philadelphia Reflections is a history of the area around Philadelphia, PA ... William Penn's Quaker Colonies
plus medicine, economics and politics ... 1773 articles in all

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Competitive Institutions: Paying for Assisted Living

Around the turn of the 20th Century, it was the fashion to build specialty hospitals, devoted to a single disease like tuberculosis or polio, or one specialty like obstetrics or bones and joints. Eventually, it was realized that almost any disease is handled better if a full range of services is readily available to it. Around 1925, some inspired philanthropists made it possible to combine specialties within a medical center, and it is now generally agreed this is a better way, when population density permits it. On the other hand, it is likely a source of price escalation. Time marches on, and the problems of excessive bigness are also beginning to predominate. The idea immediately occurs, to winnow out the routine cases which do not need so much technology, so that we can concentrate and devote high technology (and costs) to patients who will really benefit. And, immediately the perplexing outcry is heard that such rationalization is "cherry picking", which will soon bankrupt the finest institutions we can devise. The validity of such assertions needs to be examined impartially.

At the same time, the horse and buggy era has been left behind, causing new separations along class lines, the flight to the suburbs, and the migration of philanthropy toward the exurban sprawl, as well as into urban centers. In all this commotion it was overlooked for a long time that medical care was not merely following the patients to new locations, it was becoming more of an outpatient occupation. Inpatient care was shrinking, and somehow expensive hospitals were swallowing their smaller (and less expensive) competitors. It wasn't a necessary development; Switzerland still favors small luxury "clinics" of ten or twenty beds, usually containing wealthy patients of a celebrity doctor. Local customs like this, will change slowly. What America appears to need is more hospital competition and more ambulance competition; the two may actually be somewhat connected issues. For amusement, I once studied the patients in the Pennsylvania Hospital on July 4, 1776, when historical notables were congregating three blocks away. The diseases were remarkably similar to what is seen in hospitals today; problems with the legs, mental incapacity, major injuries, and terminal care. People are treated in hospitals because they can't care for themselves at home.

A BLUE-RIBBON COMMITTEE NEEDS TO STUDY INSTITUTIONAL COMPETITION IN HEALTHCARE.

This is a complicated issue, and may take several years, or even several studies to sort out. What is useful for urban settings may be inappropriate in exurban ones; local preferences must be separated from special pleading, and that is not always easy. However, the continuing care center seems to be a permanent direction which is growing in popularity, as is also true of rehabilitation centers and retirement communities. Many of these institutions might incorporate doctors offices for their surrounding community, using the same parking facilities and many of the same medical specialties for both the neighborhood and the core facility. There seems no reason to oppose either rentals or private condominium-style ownership, nor any reason to resist group clinics. Exclusive arrangements, however, are more questionable. All of these arrangements should be studied, and unexpected problems flushed out. No doubt the preliminary studies would lead to pilot and demonstration programs. And some practices which initially seem harmless, should in fact be prohibited. We have a lot to learn before we start overturning the existing order. But nevertheless, some arrangements will prove to be superior to others, almost all of them are regulated in some fashion, and the regulations should be examined, too. It should accelerate needed changes to know in advance which ones are ready to be tested, and tested before they are demanded.

*******

{CCRCs}
CCRCs

Everyone knows Americans are living thirty years longer because of improvements in health care, and some grumpy people are waiting with glee to see if Obamacare will put a stop to that sort of thing. It must be left to actuaries to tell us whether the nation saves money or not by delaying the inevitable costs of terminal illness. But one consequence has already made its appearance: people are entering retirement villages in their eighties rather than their seventies. Presumably, people in their seventies are feeling too well to consider a CCRC, although other explanations are possible.

Accordingly, a great many CCRCs are seen to be building new wings dedicated to "assisted living". A cynic might surmise there must be some hidden insurance reimbursement advantages to doing so, but the CCRCs are surely responding to some kind of increased demand when they make multi-million dollar capital expenditures. Assisted living is a polite term for people with strokes or Alzheimers Disease, or some other condition making it hard to walk, or, as the grisly saying goes, perform the activities of daily living. One really elegant place in Delaware has suites with servants quarters, but for most people the only affordable option is to be in a room designed around the idea of assisting an invalid. It's generally smaller and more austere, but fitted out with railings and bars and special knobs. Meals generally have to be supplied by room service.

Not everyone is destined to have a protracted period of decline, but it's fairly frequent and universally feared, so it's a comfort to know your present residence is attached to a wing which provides for it. The question is how to pay for it. There are two main approaches currently in use, adapted to the limited financial resources of the aged and the particularities of CCRC arrangements.

{Obama Care}
Obama Care

In the first arrangement, there is no increased charge for moving to assisted living, which helps overcome resistance to going there. However, the monthly maintenance charge for others who remain behind in "ambulatory living" is increased, usually about 20%, to provide funding for those who eventually need special assistance. That's a financial pooling arrangement, sort of an insurance plan, and like all insurance it has a tendency to increase usage unnecessarily. It also increases the cost to those who enter the CCRC at an earlier age, because they make more monthly payments before they use them. Although the monthly premium probably goes up as the costs rise with inflation, there may be some savings hidden in applying an earlier payment stream at a lower rate. That's called "present value" accounting, but like just about all accounting, its unspoken advantages and disadvantages contain a gamble on unknown future inflation.

In the other common financial arrangement, you pay as you go, when and only if you actually use the assisted living quarters. Because of the likely limit to resources, there is usually an attached agreement to garnishee the initial entrance deposit if available funds prove insufficient. The one thing which won't happen is being thrown out in the snow for non-payment; there's a law prohibiting that. Bigger apartments with large initial returnable deposits are of course better off paying list prices. Those with smaller apartments may have smaller deposits, and favor payment by a percent withdrawal. Some places haven't thought this through and offer no choice. In that case, more attention should be paid to those list prices and the percentage markup from audited cost. Better still is to have a free choice of both options, with cost transparency.

The remaining choice is between two CCRCs with differing options, made at the time you enter. The Obamacare fuss has made a lot of people acquainted with "adverse risk selection", which is largely based on the idea that an individual has a better idea of his health future than an institution does, since that includes family history as well as earlier health experiences. But in general, a young healthy person is going to live longer without needing assisted living than an old geezer who going to need it pretty soon. A hidden adverse incentive is created for younger healthier people to set the choice aside, and come back in ten years, providing they remain alert to the underlying reason the monthly fee is then somewhat higher than in some competitive CCRC. At the far end of the age spectrum, an incentive is created to go into assisted living quarters a little earlier in life, generally regarded as an undesirable choice.

All this financial balancing act can seem pretty overwhelming to an elderly person who isn't entirely comfortable with the CCRC idea in the first place. Rest assured that everything has to be paid for somehow, and after you die you won't care what choice has been made. If you trust the institution to have your best interests in mind, the only consideration of real importance is whether your money will last you out. The institution cares about that even more than you do, so while they aren't likely to offer unrealistically bargain choices, they may offer a few which are too costly.

America has had a ninety-year romance with insurance, because it is so comforting to be secure and oblivious to finances. This is just another example of the struggle between the search for security, and the struggle to devise ways to pay for it. While no one can be positive about it, we're all in this together.


Psychiatry: Last Cow in Philadelphia

The present problem with PSYCHIATRY can be summarized as follows: At the suggestion of the American Hospital Association, Congress introduced the DRG system of paying for inpatients by diagnosis, rather than itemized services. It worked well except for psychiatry, where the diagnosis usually implies little relation to the later costs it generates, so an exception was made. The dual system of payment created loopholes which unfortunately overpaid psychiatric hospitals and were described as exploitation. Congress over-reacted in a way that was unsustainable, and essentially all of the psychiatric hospitals of the nation were forced to close. This is not a history for anyone to be proud of, and the lack of outcry is also a disappointment. However, after twenty years without reform, evidently nothing is going to be done without an outcry.

CONVENE BLUE RIBBON COMMISSION TO REPAIR PSYCHIATRIC INPATIENT CARE. The 1983 BRA switched hospital inpatient reimbursement to payment by diagnosis (DRG). Abuse of the psychiatric exclusion then led to "corrective" legislation which has essentially reduced American's psychiatric inpatient care to an underfunded national disappointment. The problem is not an easy one, so a commission should devise a workable methodology for psychiatric hospitals, relying neither on present approaches, nor on DRG. But overpayment is a better outcome than no care at all. Homeless people sleeping in cardboard boxes on downtown steam grates are the consequence any visitor to the area can observe at night after the commuters go home. Psychiatric social workers readily recognize their daytime patients in the boxes.

* * * * *

Daniel Blain, M.D. (1898-1981) was just about the most important psychiatrist in America. He was the Physician in Chief of the Institute of the Pennsylvania Hospital at 49th and Market, the first and in many ways the most prestigious psychiatric hospital before it was closed. Before that, he was the first Medical Director of the American Psychiatric Association, itself the first (1844) medical society in America. His fame rested on organizing the disorganized psychiatry of the Veteran's Administration into a chain of advanced "Dean's Hospitals", a huge and very important achievement. Before that, he had achieved considerable fame as the man who took the dilapidated State Psychiatric Hospitals with a reputation as "snake pits" and made them a respectable part of the medical community. And before that, he had been born in China as the son of missionaries. As a matter of fact, even before that he was a descendant of General Mercer of Revolutionary War fame.

Dan was an outstanding example of the peculiar fact that Psychiatry was dominated by social upper crust psychiatrists in Philadelphia for a very long time. In fact, Benjamin Rush of the 8th Street branch of the Pennsylvania Hospital is known in some circles as the "Father of Psychiatry", while in other circles he is known for signing the Declaration of Independence. That isn't true in other cities, and it definitely isn't true in New York City, where the psychoanalytic school of Sigmund Freud took that city by storm, and essentially drove every other school of psychiatric thought out of town, out of medical schools, out of psychiatric hospitals. The famous sixteen year psychoanalysis of Woody Allen is an example of the extremes of that fad. Every profession has petty civil wars of that sort, best left undiscussed in public. But in the case of psychiatry, it was indirectly a material contributor to the present disappearance of inpatient psychiatry, and the related appearance of lots of homeless people on steam grates. Let me give a biased view of what is a massive human tragedy, which someone else can "rectify" if he chooses.

It starts with a Budget Reconciliation Act of the 1980s, which brought us the DRG (Diagnosis-related) system of paying for hospitalized patients. The idea was that appendicitis resulted in essentially 7 days in the hospital, give or take a couple of days, and the bills for an admission for appendectomy were for more or less the same amount. If you had fifty or a hundred cases a year in your hospital, the high bills balanced the low bills, and the overall hospital reimbursement was essentially the same without itemizing the bandages and whatnot. Congress bought this package, and after it got going, just about all hospital bills were reimbursed at one of three hundred prices, the cost to the government was the same, and there was a whole lot less bookkeeping and accounting cost. It was a success, except for a few cases where the costs did not closely line up with the diagnosis, and psychiatric hospitals were where they concentrated. So, psychiatric hospitals were excluded, and psychiatric bills skyrocketed. This experience has been carelessly cited as an example of the evils of payment by service ("fee for service"), when in fact the duration of psychiatric hospitalization is related to features of the condition, like a danger of suicide, rather than the diagnosis itself. Psychiatric leadership at the time contained many in a subset of physicians who did not think much of inpatient psychiatry in the first place, and even less of lobbying, and they underestimated the severity of the assault on the specialty. Apparently, no workable formula for pricing inpatient psychiatry has since been brought forward to be approved by a Congress which is more accustomed to getting its lobbying in the form of one-liners. And would you believe it, psychiatric inpatient care soon disappeared.

That's right, if someone in your family needs psychiatric hospitalization, I wouldn't know where to tell them to get it -- at any price. From considerably overpaying for psychiatry inpatients, to paying scarcely anything for them, this little change of the regulations caused every psychiatric hospital I know of by name, to close. It helped balance some state budgets, but it also was a considerable factor in filling the steam grates of American cities with people who sleep on cardboard boxes. And what it illustrates is that this is what political society always seemed to do, before Dan Blain and a small group of upper-crust psychiatrists were temporarily able to shame them into something better. In fact, if there is any tattered remnant of good inpatient psychiatric care left in America today, it is in the Veterans Hospitals that Dan was able to straighten out.

Dan Blain will probably eventually be bypassed as a curiosity, like his wife. She was a Wister Logan Blain, descended from families who ruled Philadelphia a hundred years before even General Mercer came along. So the Blain couple lived on an enormous farm plot, centered at 20th and Olney right next to LaSalle University, which is built on their property. It also contains the Peale House, where Charles Willson Peale lived as the elected president of the rebel faction of the American Revolution. Peale didn't know what he was supposed to do, so he resigned and painted portraits of people. The Blains enjoyed keeping a cow on their land, the last cow in Philadelphia, and the LaSalle students enjoyed stealing the cow and leaving it on the top floor of a dormitory, for laughs. Meanwhile, the Blain couple had cocktail parties on their front porch for visiting dignitaries. They usually wore blue jeans, and Mrs. Blain, the absolute Queen of Philadelphia society, was occasionally observed to pour vodka into her glass of beer. That sort of background may well have been useful when psychiatry needed to be built up and humanized, but it became a liability when the rest of inpatient psychiatry failed to appreciate what was knocking on its door.


"They Don't Make That, Anymore"

They Don't Make That, Anymore These words from the nice young lady in the drug store, left me astonished, baffled, bewildered, and angry.

Although I am retired from the practice of medicine, my limited license permits me to prescribe ethical drugs for myself. I had not realized, until that very moment, that to some extent it also isolated me from the experiences of my fellow patients. Let me explain.

{Pneumonia}
Pneumonia

The drug involved was tetracycline, which I had surely prescribed a thousand times, and to which I had a sort of loyalty growing out of the fact that I took it myself. In the days when I was a college student, I came down with a form of pneumonia that involved a lot of coughing, like whooping cough. It was then called virus pneumonia because it was somewhat different from ordinary pneumonia, even though it was called Primary Atypical Pneumonia in polite academic circles. Eventually we learned that its cause was neither a virus nor a bacterium, but rather something in between in size, called Mycoplasma. All of this is important to know, because it tends to appear as a question on a certification examination, but the fact of the matter is, it was a disease for which there was no effective treatment. We could cheer up a little to know that of four hundred recruits at an Alabama training center who came down with it, only one died. On the other hand, Legionnaire's Disease is also caused by a Clamydia and lots of them died, probably because most of them were older. But no matter, in 1944 there was no treatment, and I can tell you it is very unpleasant for a very long time, no matter how young you are.

{CAT Scan}
CAT Scan

In 1950 I got it again, but this time I was a doctor and knew there was a good treatment. It sounds strange to say so, but I was sort of happy to be able to try out the new medicine, which was then called Aureomycin because the powder was golden yellow. Aureomycin was a trade name, with a patent, and when the patent expired the generic form was called Tetracycline. It worked just fine, and in three or four days I was out of the hospital, perhaps a little weak and shaken, but cured. Incidentally, I discovered an interesting feature of the disease which I believe has not been previously reported. It had long been observed that the chest x-ray showed pneumonia while the stethoscope perceived very little abnormality, a feature which disconcerted those of us who were concerned with the cost of medical care, particularly members of a generation who felt sniffy about the dependence younger physicians displayed for x-rays, and nowadays for CAT scans and MRIs. Unfortunately, in this particular instance, x-rays are clearly superior to stethoscopes.

{Pneumonia X-Ray}
Pneumonia X-Ray

My third time around for "viral" pneumonia was a few years later; I was sitting on a park bench near the hospital when I recognized the old symptoms were coming back again, so I went straight to the x-ray department and had a chest x-ray less than an hour after the symptoms appeared. I planned to have an x-ray to prove it, go get some tetracycline and be all better over the weekend, with a rollicking anecdote to tell doctor friends about. Unfortunately, the x-ray was normal, so I was admitted into the hospital to see what was wrong. The next morning the x-ray showed a densely consolidated lung, so it had been viral pneumonia all along. And so my old prejudices were vindicated; it was possible to be too quick to order x-rays after all. Unfortunately, the extra twelve hours without treatment allowed me to get a lot sicker than I had to be. I think I know this because, doggone it, I developed the same disease several decades later, took no shortcuts to the drug store, and was fine in a couple of days after I immediately started taking tetracycline. You could say this strange recurrence of Mycoplasma pneumonia over one lifetime sort of illustrates how medical care of the disease has become progressively cheaper. Instead of a month in the hospital with no treatment, it was now a matter of skipping the stethoscope, skipping the x-ray, skipping the hospital, and just swallowing some cheap tetracycline capsules. You have to have the nerve to do it, of course, and ethically you probably only have a right to do it to yourself, knowing the risks and being willing to accept them. There is, however, one flaw in this story.

{Obamacare}
Obamacare

When Aureomycin first emerged from the clutches of the FDA (and well before that accursed Kefauver Amendment), it seemed astonishingly expensive. Because I knew what it weighed (250 milligrams per capsule), and I knew what gold cost ($35 an ounce), it was easy for an idle mind to calculate that Aureomycin cost more than gold. Gold now sells for $1700 per troy ounce, so you could take this story in the direction of inflation. I rather prefer to take it in the direction of nominal dollar amounts, because Aureomycin retailed for $5 a capsule the third time I had the disease, and $1 per capsule when it lost its patent and became tetracycline. The fourth time I had the disease, I bought a container of fifty capsules for 76 cents. But as you have already heard, by the fifth time I couldn't buy it for any price, because everybody had stopped making it. Since my view of the economics of useful commodities is that low prices will only cause shortages if there is artificial market interference, the usual cause of shortages is rationing. Somebody who understands the 2500 pages of Obamacare better than I do will have to tease out the way rationing has caused shortages of tetracycline. And when they are done confusing the public, let them explain why you also can't buy KMnO4 crystals (potassium permanganate), which has cured more cases of athlete's foot for twenty cents, than all those cans of stuff in spray canisters.


Stepping out of the Obamacare Frame

The most painful criticism of Obamacare, is it wastes so much opportunity to make important reforms -- and still doesn't make them. Gail Wilensky, who spent two years running Medicare and Medicaid, spending decades struggling with reform of the healthcare system, recently deplored the program's inconsequential goals, if coverage extension is all there is to it. More likely there was to be more, but events overtook the project. Seemingly, the President underestimated the difficulties, and overestimated his advisors. Under the circumstances the natural thing would be, to back off in the face of many other demands on his attention, hoping there would be time left in his presidency to recover. The longer he delays, the less chance this strategy will have.

Most of the things which are seriously wrong, had been wrong for decades. Using insurance for small healthcare claims is too expensive, merely making administrative costs compulsory and universal for no purpose other than tax avoidance. Only insurance against large and infrequent medical expenses has some modest place we might retain and repair, while betting on science to reduce sickness costs. Rather than play historian trying to explain the whole situation, let me devote this chapter to a handful of illustrative changes which might make a big difference, even if only a few prove spectacularly successful. That is, we should taste them to see if they work, not bully ahead and swallow a whole banquet. Listen to the famous warnings of Galen and Hippocrates: primum non nocere . At least, don't make matters worse.

1. TAX EQUITY. I wish I could name a solitary blunder we could fix, or a solitary villain we could hang, to watch everything get better. Our general problem has many contributing problems at its source, At the top of the list, It's a toss-up between a handful of insurance practices begun seventy years ago, and the World War II expedient which we will call the Henry Kaiser tax exemption. I'm sorry, but "job lock" is advantageous to employers, who should not be expected to give it up without a reason. Small businesses are small, but in the aggregate are still important competitors. The fairness argument is meaningless in a competitive environment; large employers must be given something in return for a concession. It is only necessary to review the many regulations which favor small businesses over large ones, to see that large employers feel abused that government's thumb is on the scale. The way to eliminate job lock is to be found in bargains struck in this other environment, where there are more opportunities to balance unfairness arguments. The difference in costs is 15-30%, and it's big enough to warp the system toward certain types of insurance. It's certainly big enough to induce almost anyone to take it when offered. In summary, the designers of the Affordable Care Act seem to have underestimated the value of the Henry Kaiser Law to large employers, and therefore have not made a high enough offer to induce large employers to give it up. Since that would create a tax cost for the government, the rate should be reduced by about a quarter and extended to everyone.

{top quote}
If Congress simply must micro-manage -- {bottom quote}
A few tips

The importance of preserving the tax inequity in the eyes of big business, has been under-estimated. However, the importance of eliminating it has also been underestimated by reformers. All tax exemptions stimulate overuse, because they amount to a discount. Federal tax exemptions now mainly extend to two consumer purchases: health insurance and home mortgages-- and both of them are destabilized by it. We currently have a national crisis in both at the same time. The tax-subsidized home-mortgage housing bubble preceded the financial panic, and tax-subsidized health care has led health costs into a second unsupportable bubble. Considered on the level of economics, giving a tax advantage to one group but not to its competitors requires a truly substantial justification, because it can distort whole industries. The point here is that you can't eliminate it until you give it to everyone, because only then will the lobbyists go away.

Giving a tax subsidy to employees but not to self-employed or unemployed persons created the uniquely American system of employer-based health insurance, and now largely perpetuates the rather odd fringe-benefit system. Many employers wish they could find a way out of it. Emphasizing the important but temporary origins of this tax quirk in the California war industries, merely dramatizes its lack of justification for seventy years afterwards. Since the tax preference has been sustained almost exclusively by lobbying, it even calls into question the sustainability of our form of government. It should not be necessary to describe collateral damage like job lock and internal hospital cost shifting. The issue of equal justice alone should be enough to justify the abolition of this unfairness. To go still further down this path, mandating individual coverage to large populations while also excluding some of them from tax exemption because of the nature of their current employers, is to invite a Supreme Court case. And since mandatory coverage has been passed, the sooner a case is granted certiorari , the better.

2. REVISIT THE INSURANCE INNOVATIONS OF THE 1930-40s:

INDIVIDUAL OWNERSHIP OF HEALTH INSURANCE POLICIES, is really another way of saying eliminate employer ownership, because somebody must be the owner. Aside from the person covered or the person paying the bill, there are no other obvious choices. The only conceivable alternative is government ownership. Because the present participants fear that particular outcome more than almost anything else, a major source of resistance to change is the lack of clarity about what would replace employer ownership. And the longer the Obama administration fails to adopt reassuring measures, the more they are suspected of having that motive. Determined opposition originates in the current owners of "self-insured" groups, the employers, or the unions who have acquired this function from employers. Since most such arrangements are de facto "administrative services only", insurer protests of higher administrative costs for individual ownership are often just relics of ancient combat between Blue Cross and commercial insurers.

Regardless of the internal structuring of incentives, healthcare reform cannot be permanently settled without individual ownership. It must be understood, however, that eliminating the tax preference could be resisted at first by patients who acquire it, because of fear the tax would in some way be shifted to them, too, rather than eliminated. That need not be true, if consideration is given to the relative size of the losers and gainers. Since the membership of group policies greatly outnumber individual policy holders, the revenue cost of tax equity -- after redistribution -- would be considerably smaller than 50/50, and likely be in the range of 75/25.

PRE-EMPT STATE LAWS WHICH INHIBIT CATASTROPHIC COVERAGE. State mandated benefits now impact high-deductible insurance in many states, and are the main reason Health Savings Accounts have been slow to spread. The provisions of ERISA shield employer-based health insurance from the unfortunate health coverage mandates in question. ERISA could not have been successful without this pre-emption, so unions and management unite in absolute concern to isolate ERISA from congressional meddling, although for different reasons.

REVISIT McCARRAN FERGUSON ACT . This act effectively makes the "business" of insurance the only major industry restricted to state rather than federal control. It should be amended to permit the sale and portability of health insurance policies across state borders, thus greatly increasing competition and reducing prices. Once more, present law discriminates in favor of the employees of interstate corporations, who are also exempted by ERISA.

RESTORE ORIGINAL FORM OF PROFESSIONAL STANDARDS REVIEW ORGANIZATIONS (PSRO). These physician organizations effectively regulated many issues which are now the subject of complaint. They were lobbied into ineffectiveness in 1980, and together with "Maricopa", essentially turned medical oversight over to insurance companies who thus receive no physician advice except from their own employees.

{top quote}
The Supreme Court Needs Help, Too {bottom quote}
LEGISLATE OVER-RIDE OF 1982 MARICOPA CASE. This unfortunate U.S.Supreme Court 4-3 decision, was never tried and upholds only a motion of summary judgment about a per se violation. It prohibits physician groups from agreeing on lower prices, and has been taken to mean physicians are excluded from exercising control of HMOs and Managed Care. It also perpetuates the notion of individual competitors in a profession which is rapidly acquiring larger groupings as units of competition. By some quirk, the full tape recording of the 1982 U.S. Supreme Court arguments can be heard on the Internet. It is above this author's pay grade to know whether it would be better to ask the Supreme Court to review its earlier decision, or to make legislative changes in the antitrust law which would somehow result in a better outcome.

WIDESPREAD INTERFERENCE WITH MARKET PRICING. Of equal or greater importance, is the package of expedients introduced by the Blue Plans in the 1920s and refined up through 1950. They include: first dollar coverage (the Henry Kaiser tax subsidy may share equal blame), service benefits, internal hospital cost shifting, hidden discounts to favored insurance companies, and the "pay-as-you go" system. A more recent addition has been the DRG system of inpatient reimbursement, a brilliant idea poorly implemented, leading to total confusion in hospital inpatient and outpatient pricing. All of these subjects have been discussed at length in this book, and will not be repeated here.

3. ADDRESS QUIRKS AND ABUSES WHICH DISTORT PUBLIC MANAGEMENT OF HEALTHCARE:

SUBJECT MEDICARE TO MORE UNDERSTANDABLE AND CONVENTIONAL ACCOUNTING. The present special accounting of transfers by an agency of government, escapes being treated as debt would be treated in the private sector, and actually treats interdepartmental debts as assets. Medicare is now the largest debtor in the world, rapidly becoming more indebted, and hardly anyone realizes it is 50% subsidized. The implicit need to extend this subsidy to the rest of health insurance, makes "Single payer" wholly impractical, however attractive it is to get a dollar for fifty cents. The public is largely unaware that Medicare is 50% supported by tax infusions from the general fund, not to mention the tax deduction employers take on the payroll deductions supporting Medicare. The change sounds like an inconsequential technical one, but merging the debts of Medicare and Medicaid would be considerably eased by this improved transparency, as just one example of where the special accounting leads us. Uncoupling the debts of Social Security from those of the 1965 amendments would be another example, but in the reverse direction because of the accounting razzle-dazzle. Until the CMS reports make this subsidy more apparent, the public is not participating in the debate.

{top quote}
No surgeon can pay malpractice premiums out of Medicaid reimbursement. {bottom quote}
Now hear this.

TORT REFORM. Malpractice costs mainly affect surgeons and obstetricians, who sometimes pay annual malpractice premiums of $200,000. Not only does this provoke defensive medical behavior, it provokes local physician shortages which in turn lead to hospital cost-shifting and other responses. The only tort reform which has proven value is to place a limit on awards for "pain and suffering", the traditional catch-all cost expander. Resistance to a cap on pain and suffering might be softened somewhat by allowing the greater of $250,000 or 10% of the total award. It is entirely unreasonable for pain and suffering to be worth about seven times the medical or "economic" damages, as is currently standard in the malpractice insurance industry. There may be other approaches to curing the malpractice problem, but many have been tried, and the medical profession believes this is the only one with proven success. It is very clear that the public does not understand how small a proportion of a typical malpractice award relates to the injury, and how much it relates to appeals to jury sympathy.

{top quote}
Treat liabilities like debts. And transfers from the general fund as liabilities. {bottom quote}
Accounting, for Congressmen
PARITY BETWEEN INPATIENT AND OUTPATIENT CHARGES. As a general principle, when a service, device or drug is used in both the inpatient area and the outpatient one has its price exposed to regular market forces in the outpatient arena, the same price should be applied to it in the inpatient arena, plus a (separately negotiated) inpatient overhead adjuster reimbursement which generally applies to inpatients, and a second adjuster for the emergency room. There will be some services which are totally unique to inpatients or emergency room, which will have to be treated as outliers. In this way, a mutually reinforcing restraint is placed on such dual-use items -- with the market holding down outpatient costs, and the DRG ultimately holding down inpatient/emergency costs including outliers. As a general rule, the overhead cost-multiple established for dual-use, should apply to the single use items of either in-patient or out-patient. The key to all of these balancing limits is to permit open competition between hospital emergency services and private competitors, and an absolute prohibition of linkages between providers and emergency vehicle operators. After a brief trial, all such price constraints should be exposed to re-negotiation with an eye toward establishing transparent regional norms. MANDATE DISPLAY OF DIRECT COST MULTIPLES NEXT TO PRICES (FEDERAL PROGRAMS ONLY) (whenever prices are displayed, as in bills, price lists, etc.) FOR ITEMS COVERED BY HEALTH INSURANCE. Some high mark-ups are justified, but the public has a right to criticize them. This would not prohibit, but would considerably hamper, cost-shifting. It should be presented to provider groups as forestalling the prohibition of cost-shifting because of abuse. For this and other reasons, it would enhance provider competition.

REIMBURSE HOSPITALS ONLY ON RECEIPT OF ASSURED POST-DISCHARGE HANDOVER OF MEDICAL RESPONSIBILITY (FEDERAL PROGRAMS ONLY). Unfortunately, hospitals do need increased incentive to improve communication after discharge, which now increasingly occurs on a Saturday. Payment by diagnosis, otherwise a good idea, results in sequestration of medical charts in the accounting department.

Similarly, REIMBURSE HOSPITALS FOR LAB WORK ON THE LAST DAY OF HOSPITALIZATION ONLY AFTER DEMONSTRATION OF REPORTING. Such lab work, frequently obtained within hours of discharge, is sometimes overlooked and may even be unobtainable for the previously mentioned reasons, which in this case also apply to the hospital's own physicians.

ENCOURAGE THE ESTABLISHMENT OF REGIONAL BACKUPS FOR AMBULANCES DRAWN OUT OF AREA. At present, ambulances are limited to going to the nearest hospital, rather than to the hospital of patient preference. The main justification for such behavior is the possibility that a second call might come while the ambulance was in a distant area. Fire departments have long solved this problem by shifting reserve vehicles into an overstrained area, to cover that area while the home vehicle is temporarily unavailable. In some areas, a reserve vehicle backup might require additional ambulances, but mostly it requires a mobile phone network. In areas of extreme distances between ambulances, the main need would be to relax regulations which exclude volunteer vehicles from serving that function. In densely settled urban areas, we now have the preposterous situation of mothers in active labor being stranded at the wrong hospital, only a few blocks away from their obstetrician. When such situations are repeatedly encountered, the current IRS exemption from financial reporting should be rescinded from the ambulance sponsor.


Pharmaceuticals:The Coonskin Hat

CONVENE A TWO-YEAR BLUE RIBBON COMMISSION REPORT ON MODIFICATION OF THE PURE FOOD AND DRUG ACT.The issue is this: The original Pure Food and Drug Act only required proof of safety before a drug could be sold. The Kefauver, or efficacy, requirement was added in 1962, triggered by the Thalidomide tragedy which has no real bearing on the matter. A manufacturer is required to demonstrate efficacy of a drug for some condition, in addition to safety alone, before he can sell it. The cost of new drug introductions has markedly increased by billions of dollars for double-blind studies, and inevitably consumer price rises must make up for it. A number of benefits of this efficacy requirement have been demonstrated, including a reduction of patent remedies with uncertain value, and increased public confidence in their healthcare. To a certain degree, the FDA has supplanted the role of the medical profession in creating dependence on evidence-based prescribing, approved by the FDA rather than by professional circles, and that malpractice claims are part of the hazard. It is true that proof of important efficacy can justify the use of drugs which otherwise have recognized dangers. Disruption of corporate balance, favoring larger corporations, can be surmised. Therefore while it is not obvious that the Kefauver Amendment should be abolished, it is likely that important financial savings might be expected from modification of its cost impositions.

Senator Estes Kefauver of Tennessee, who ran for President wearing a coonskin hat, left a legacy of high pharmaceutical costs according to his opponents, but among his supporters he wears the halo of defeating deceptive practices. It is reported that in Kefauver's time the idea floated around, that the Food and Drug Administration should mandate a program of tests to prove that all of these new drugs were good for something, not just that they were safe to take. Otherwise, it was thought, a great many innocent citizens would be induced by advertising to take worthless patent remedies. For many decades, the American Medical Association had denounced something it called "Quackery", which sort of sounded as though they had the same idea. Homeopathy, which at that time competed fiercely with the AMA, repeatedly thundered however it was better to take useless pills than use those dangerous remedies like bleeding and purging. To impartial observers, it sounded as though these two medical competitors were attacking each other in code. The Latin phrase, Primum non nocere ("At least, do no harm.") resurfaced in common parlance. Kefauver was running for President, he seemed to have an issue, and the Kefauver Amendment passed into law.

Let's have a look at the implications. The Pure Food and Drug Act had quite sensibly demanded proof that a new remedy was harmless, or at least harmless in the doses usually employed; otherwise, the drug could not be legally sold or advertised. A new drug had to be safe. However, many chemicals are useful in small doses, but entirely poisonous in large amounts, so it might seem reasonable to qualify approval by outlining the circumstances of safe use. However, the Kefauver Amendment seems to be more directed toward a quackery danger, where the public interest is more the protection of the public purse. In any event, the specifics of the law promote civil servants into scientific umpires without major focus on their scientific qualifications. The Kefauver Amendment provided that an acceptable drug had to be proven scientifically efficacious, as well as safe. So the burden of proof was on the drug manufacturer whereas evaluating that proof shifted to the civil servants instead of resting on professional consensus. With billions at stake, the manufacturer had both an incentive to find new cures, and a further incentive to find evidence of efficacy. Concealment of evidence was a constant possibility, so the civil servants became wary and increasingly conservative. As judged by the outcome, pre-release testing was required to be increasingly expensive.

Somehow the incentives got twisted, in what started as a benevolent effort to protect the public. The thalidomide disaster is credited with imposing useful conservatism on decisions. But two decades later, thalidomide is proving useful for many otherwise hopeless cases of cancer. Could this doubly unfortunate experience have been improved, somewhat? Thalidomide is not good to give to pregnant women, that's pretty clear. But does that mean nothing should be marketed until it is tested on pregnant women? Maybe it does, but that was a very expensive decision to make. And it should not be made by trial lawyers, or fear of trial lawyers.

There are many such quandries about the amendment, and it is time to review the experience. Maybe this is the best we can do, but I doubt it. The nation needs to impanel a group of experts, give them two years, and ask what they conclude.

---------------------------------------------------------------------------------

Antibiotics were bursting on the public news at this time, so it was clear a drug might be efficacious for many conditions. Was it to be required that a new drug must be proven efficacious for all those conditions before it could be sold at all? The result of this quandary was that a new drug must be proven to be efficacious for at least one condition. It didn't take long for the industry to figure out what to do about this ruling; just spend the money to prove that the drug was efficacious for the easiest condition imaginable, one that had a dozen existing remedies that were as good as or better for the condition. That would satisfy efficacy, at perhaps considerably lesser cost than for the usage that was really planned.

Or the opposite situation, illustrated by aspirin. Aspirin had been used for a century for headaches, when the astonishing discovery was made that half an aspirin daily would reduce the incidence of strokes and heart attacks, by at least half. Was the law to be revised, to take account of the second condition without disturbing the first one? If Congress wants to muck around in this huge area, they had better enlarge the Washington offices of Congressmen hugely, just to keep all the archives of pharmacology, in several languages, going back at least a century. The situation cries out for delegation of the decisions to more specifically trained experts, except for fear that someone will inevitably die of a mistake, and the trial lawyers who are abundant in Washington will sue, and somebody will lose his seat in Congress; can't allow that to happen.

Meanwhile, the clinical trials industry has flourished. It happens that I was one of the twenty or so founding attendees of the Association of Clinical Trials, which now attend concurrent meetings in hotels around the world with thousands in attendance. The meetings are filled with speakers bearing slides, boasting to each other of experimental groups in the thousands, and grant money in the millions. The amount of money spent on this sort of rote research is simply unimaginable. No doubt, useful scientific knowledge surfaces as a result of this effort. Somebody needs to compile the amount of waste which is created when some vice-president up the line, decides to abort the research because its potential profitability has been calculated to be low.

And where does that leave the doctor? He has spent years studying the disease, and the chemicals, and the risks. Is he to be deprived of having a conference with the patient and/or family, explaining the risks and what he considers to be the chances of the patient for a cure? Perhaps the family doctor, depicted in the painting as pondering the chances of the little boy on an ironing board, does not have the necessary experience. But surely the super-specialist, sitting by his computer in a sixty-story office building, can be trusted to take now-or-never chances with his willing patient. Because the chance to cure the patient may only come around once, and someone has to be empowered to assume the risk of being wrong. The trial bar probably is sincere in protesting they have no reluctance to see a better appeals system evolve, or a better system of best-efforts experimentation. But it will take a long time to repair the existing damage; the trial lawyer knows very well what the doctor probably thinks of him, based on a long experience of his own or his trusted colleague's stories to the effect that, well, you can't trust any of them.

Let's repeat what has just been said. Safety is not the present issue; it is to be assumed the Food and Drug Administration has approved the evidence that the drug is safe to use, submitted the evidence to a panel of experts, and has received an opinion that the drug is safe. Let us also assume that the doctor has a hunch or some happenstance experience that it might be good for some condition, and wants to try it. Does this warrant the requirement that, before the doctor may use the drug, millions or even billions of dollars must be spent on research showing that the drug is good for something or other, not necessarily the intended usage?

In the early days of this legislation, a reassuring paragraph was put on the leading page of the Physician's Desk Reference, still given free to every physician:

Once a product has been approved for marketing, a physician may choose to prescribe it for uses or in treatment regimens or patient populations that are not included in the approved labeling.
However, these reassuring words are preceded by language wrapped around an entirely different threat:
The FDA regards the words "same in language and emphasis" as requiring VERBATIM use of the approved labeling providing such information.

Hello Dr. Fisher, I was looking for an e-mail address and this is what I could find. I must tell you my Mother who you treated for years passed away last May. She was so ill with so many problems. I am sure you remember Peggy Marchesani. We often spoke of you and how much we missed you as our Dr. You also treated my daughter Michele who will be 40. I am living in the Doylestown area and have been seeing the Dr's there.. I just had my thyroid removed do to cancer. I have my fingers crossed they get the medicine right. I am not happy with my Endochronologist she refuses to give me Amour. I spoke with my Family Dr who said he will take care of it. I also discovered I have Hemachromatosisand two genetic components. I have a good Hematologist who is monitoring me closely. I must say you would find all of this challenging. Take care and I just wanted to convey this to you . You were way ahead of your time. Thank you, Joyce Gross
Posted by: Joyce Gross   |   Apr 4, 2014 2:06 AM
I come upon these articles from time to time and I always love them. Is the author still alive and available to talk with high school students? Larry Lawrence F. Filippone History Dept. The Lawrenceville School
Posted by: Lawrence Filippone   |   Mar 18, 2014 6:33 PM
Thank you for your articles, with a utilitarian interest, honestly, in your writing on the Wagner Free Institute of Science [partly at "...blog/1588.htm" - with being happy to post that url but the software here not allowing for the full address:)!] I am researching the Institute, partly for an upcoming (and non-paid) presentation and wanted to ask if I might use your article's reproduction for the Thomas Sully portrait of William Wagner, with full credit. Thanks very much for any assistance you can offer here. Josh Silver Philadelphia
Posted by: Josh Silver   |   Jun 2, 2013 1:39 PM
Thank you for your articles, with a utilitarian interest, honestly, in your writing on the Wagner Free Institute of Science [partly at "...blog/1588.htm" - with being happy to post that url but the software here not allowing for the full address:)!] I am researching the Institute, partly for an upcoming (and non-paid) presentation and wanted to ask if I might use your article's reproduction for the Thomas Sully portrait of William Wagner, with full credit. Thanks very much for any assistance you can offer here. Josh Silver Philadelphia
Posted by: Josh Silver   |   Jun 2, 2013 1:39 PM
George, Mary Laney passed away last November. I was one of her pall bearers. She had a bad last year. However, I am glad that you remembered her and her great work. I will post your report at St Christopher's and pass this along to her husband Earl. Best wishes Peter Hunt
Posted by: Peter Hunt   |   Mar 28, 2013 7:12 PM
Hello, my name is Martin. I came across [http://www.philadelphia-reflections.com/blog/1705.htm] and noticed a ton of great resources. I recently had the honor of becoming a part of a new non promotional project on AlcoholicCirrhosis.com. We decided to put together a brief guide about cirrhosis, and the dangers of drinking. We have received a lot of positive feedback and I wanted to suggest that we get listed on the above mentioned page under The National Institutes of Health. Let me know what you think and if you have any further requirements or suggestions.
Posted by: Martin   |   Jan 1, 2013 8:51 AM
I FIND THIS VERY INTERESTING, INDEED. I AM HOWEVER, SEARCHING FOR THE ANCESTOR WE HAVE BEEN TOLD WAS JOSEPH M. WILSON OF JORDAN TOWNSHIP IN WHITESIDE CO. IL USA. MY HUSBAND WAS ORPHANED AND WITH LITTLE CONTACT WITH HIS FATHERS SIDE OF THE FAMILY THE 9TH OF 10 SURVIVING CHILDREN SINCE ALL ARE DECEASED BUT, ONE). I HAVE HOPED TO FIND HIS CONNECTION AS TO THE STORIES RELATED BY SEVERAL OF HIS DECEASED RELATIVES THAT WE ARE CONNECTED TO THE WILSON MILL FAMILY HISTORY. OF JOSEPH AND FRANCES. MY HUSBAND WAS ALSO, FAMILY TO: GRANDFATHER RANSOM (ISABELLA)WILSON & HIS BROTHER WILLIAM; OF ELKHORN GROVE CARROLL CO. IL USA AND HIS SON JOSEPH WILSON(NANCY). I?WE( MY SONS AND NEPHEWS NEICES AND GRANDDAUGHTERS IN COLLEGE... WERE HOPING THAT NOW THAT I AM ON THE COMPUTER AND WITH YOUR HELP THRU THE GENELOGICAL SOCIETY TO YOUR ADDRESS WE MAY FIND THE FAMILY WE SEEK. MY LATE HUSBAND AND I DROVE PAST THE SITE OF THE FIELD WHERE JOSEPH AND FAANCES ARE BURIED , THE CEDARS ARE GONE AND IT IS NOW FIELD. I HAVE BEEN HOPING TO FIND THE LINK FOR OVER 30 FAMILY TO PAY TRIBUTE TO THOSE WHO HAVE GONE BEFORE AND PERSEVERED TO BRING US THE LIFE WHICH WE ENJOY AND SERVE, TODAY. I RECEIVED ONLY THIS WEEK BY A FLUKE AN EMAIL WITH PHOTOS FROM A 3RD COUSIN THAT FOUND MY EMAIL ON A COUSINS EMAIL ADDRESS AFTER INQUIRING AND INTRODUCING HIMSLEF: AND HE TOOK THE TIME TO SEND MANY PHOTOS AND HISTORY OF GRANDPARENTS AND FAMILY AS WE HAVE HAD NONE. WE STILL DON'T HAVE A PHOTO OF HIS MOTHER AND FATHER. WHAT I HAVE OF THE TREE, I AM ANXIOUS TO SHARE WITH FAMILY THAT IS SEEKING HISTORY, AS I STILL AM HOPEFUL TO FIND IT IN TIME FOR THE DEADLINE AUG. 30 TYPED AND DELIVERED TO MY MARTIN HOUSE MUSEUM WHERE I AM A MEMBER. MY HUSBAND WAS A MASTER MASON WHILE IN LODGE WITH THE COUPLE THAT DONATED THE HOUSE TO BE A MUSEUM. THANK YOU FOR YOUR TIME AND THE GRAT WORK YOU HAVE ALL DONE ON THIS HISTORY. WE WERE LIFE MEMBERS OF THE LUTHERAN CHURCH BUT , THERE IS NOT ONE IN OUR TOWN, SO I FOUND THE REFORMED CHURCH,OF WHICH, I AM VERY HAPPY TO BE A PART. THANK YOU .
Posted by: SUSAN WILSON   |   Aug 12, 2012 12:49 AM

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