Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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What is happening to all of the other employees a delivery system? What's happening to the nurse glut ant and the optometrist glut?

Office overhead. Back to the office in the house?

I am apprehensive about the effect of reducing tax brackets on overhead costs of a medical practice.

DRG's ve prospective payment. Do we want to work for reform of prospective payments system or do we want to make it collapse?

"Gatekeeper" concepts. Is there a problem of overspecialization mixed in this, or is passionate defense we hear just a matter of self-referral by patients?

Industry rightly has a role in reducing the maintenance costs of employee illness, even they are dominating the spending of money which is no longer theirs. However, health costs are also, a luxury item, where people have a right to spend disposable income as they see fit. Psychoanalysis, cosmetic surgery, simple curiosity about their bodies, fitness, etc are no business of business. By mixing the two issues together, talking about "quality medicine", denouncing a "two-class system", business is getting into areas they should be evicted from.

Market Efficiency story: Program trading, in which instructed to buy the component stocks of an index whenever the options or futures market detects a certain profit by exchanging the stock for the options, was a new phenomenon in 1985. It could send the Dow Jones Average up or down 30 points in a day, at the time of the "triple witching hour". By the time the press began to notice it, or in about eight months, the game was pretty well over. When the concept was first employed, the computers reacted to a 5% margin of profit, but the margin was continuously narrowed as the game got hotter and more popular. One broker lost $4 million in one day by mistakenly reaching for a spread of .8%, and by eight months the target spread was .3%. People had moved on to the second-order game, which was to trigger buy and sell orders in anticipation of the 30-point jumps. When that game is over, there will be a third-order game. But the efficiency of the arbitrage game is such that the market in American stocks will be totally efficient in another year or two, and you will not even see a ripple of price movement to identify the presence of a witching hour. Like doctors, arbs put themselves out of business by doing a good job; however, the time of a transaction is 40 years of practice, not one nanosecond of a stock trade. The Market principle is the same for both professions, but the inherent inefficiency of the medical marketplace is inherently extreme.

The baby boom: the pig in the python. The source of libertarian ideas because of the licentiousness of the sixties? What does this mean for medicine? Anything?

From 1970=6 to 1984 he was a 300% increase in Congressional staff and committee staff. This was more important to Republicans than Democrats because the bureaucrats were mostly Democrats; what happened was a great movement of Conservative young people to Washington. The Cato Institute, eg. Conservative, libertarian ideas got generated, publicized, excited. A lot of wheels were reinvented; but a lot of liberal assumptions were tested, challenged, changed. They can't make up their minds between Jefferson (Cato--liberty and individualism) and Hamilton (growth), but it is remarkable that they took Jefferson away from the Dems.

Efficiency, we must have efficiency. Efficiency in medical care is part of the productivity of society in general since a major component of health care is maintaining workers on the job (not the only part, however, some of it is a consumer luxury item.). Within health care efficiency we have productivity, but that not the same as productivity of industrial output of the nation.

Opinion analyst Terry Nichols Clark: "You can provide services to the disadvantaged and hold down taxes only if you make government more efficient."

George's story about the inefficient Japanese culture, deliberately employing unnecessary people to do menial unnecessary jobs, at the same time that the nation was moving toward high efficiency in production. The cultural consensus was reached about how fast and how slow, and it was disruptive for foreign firms to come in and betray the tacit inefficiency. So the Japanese pass laws a create obstacle to foreigners, which foreigners greatly resent.

The Privatization of Government. A nice idea, and no doubt it helps. But the PRO contracting process shows you how you dominate a contractor in his money, policies, and personnel. It makes very little difference if they are privatized or not in terms of what they do. But maybe it's cheaper that way, for all I know.

Hanging Paul Nathanson out to dry as a symbol to the others, and then having him get a job at $200k. Where is he in five years? The three-way control of a program, including the bureaucrats, the contracted program, and the authorizing committee. Also, the appropriations committees, although this is less intrusive than I thought. McShain underbids and then squeezes his subcontractors; McCloskey underbids and then gets a supplemental appropriation from his political cronies.

Paul H. Weaver, author, The End of the Corporate State: During the 1920s there was a curious growth of licensure for all sort of things like barbers, taxi drivers, etc.

Weaver: you can search back in literature to the origin of the corporation and never find any sympathy for laissez-faire in corporation managements; they always favored regulation and government control, planning, tariffs, etc. "American business has always favored government management of market".

Weaver: The attitudes of business are changing because of 1) takeover activity 2) global competition 3) weakened unions 4) less respect for authority in society 5) contempt for PR which tells you things are other than what they are. In my opinion (GRF) the basic one is global competition. American society has said it wants efficiency and productivity to beat the Japs; dignity and generosity and the old school tie are too expensive if they hamper efficiency. What does this mean for medicine?

DRG: Among the consequences of the hasty slap-together of PPS, was the failure to field-test, failure to consider ( let alone anticipate) the secondary consequences. The speedy success was particularly unexpected, and so there was scant opportunity to react to changes as they appeared. The change outrun the data collection, and so the doctors found themselves squeezed as both part A and B were constrained rather than use B as a cheaper escape from A. As overhead got worse, especially liability premiums, the squeeze on the doctors became serious; consequently they were perfectly willing to cost the system more by hospitalizing. The DRG would have saved even more money than it did if the B squeeze had been restrained.

the Ontario strike (see Harry's letter in July 1986) over balance billing. What effect on America?

How about using the AMA reports which they produced in response to my resolutions, as chapter?

From George Schaefer: The Sherman antitrust act made labor unions illegal, until freed by subsequent legislation (Wagner Labor Relations act?). For about 10 years, labor unions went underground, and his great-grandfather was a member of the Knights of Labor, an underground union organization. Thus the Wagner Act, or whatever it was, was the greatest of the many indulgences sold. What an irony, if a law passed at the behest of small businessmen ultimately came to victimize them more than others, since the essence of the indulgence is that you must be in a genuine employer-employee relationship to be entitled to the indulgence.

Pre-existing Illness:

1) ie clubfoot. You were born with it; it should be included after you have had insurance for two years. not to include it would mean you might have trouble getting a job.

2) ie multiple sclerosis, with complete recovery. If you developed it while covered, it is never again a pre-existing illness; only a matter of dispute between two carriers, with the extra cost born by the carrier which covered when it developed.

3) ie Ms. if you developed it between coverages, it makes some difference how long you were without coverages, it makes some difference how long you were without coverage. one formula would have it be deniable by the second carrier for the same length of time you went bare, up to a maximum of two years.

4) If there can be uniform agreement about the duration of the deniable period, then perhaps there can be agreement about the cost of the "tail". The tail does not ensure you when you are uninsured, it merely recognizes the extra cost of health insurance subsequent to illness which developed during the uninsured period. An actuarial cost would be best, but a pool would serve, and some arbitrary formula might be workable even though there is no experience on which to base an actuarial judgment.

Summary: there are two costs of illness when you are uninsured, the actual costs, and the later increase in premiums if the illness is chronic or recurrent; this essay addresses only the latter. There may be a separate issue of deferred semi-elective health needs which accumulate during uninsured periods; therefore it may not be fair to expect the two insurance companies to pick up all extra cost, even with tail insurance.

Adam Smith: People of the same trade seldom get together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

The National Journal: 1700 editorial page editors of the nation are little read by the public, but have an enormous influence on Congressmen less so on the administration. it costs about $5000 to send a mailing to each editors; about $80,000 to visit a significant number of them, and generate 40-50 editorials. "a coterie of opinionated high-brows who pen the unsigned pleas, paeans, platitudes, censures, insights, analyses and occasional arcs of whimsy that fill the left side of newspapers' editorial pages."

Closed for Lunch: the lunchroom at Stockley. The astounding ability to place three in a house with full-time supervision, vans to the training center at less cost than Pennhurst. But don't forget the great people.

The data experience with PA DPW. One whole year, and no information.

The 1500 form: did HCFA mandate information which wouldn't fit? Or is it intransigence? Why no communication between Medicare and Medicaid? HCFA central office and regional office difficulties .

The HCPCSA code-- a vital issue which the AMA won, but at a price. The jerry-rigged computer and administrative complex of the carriers and the Medicaid-welfare agencies exposed.


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