Here’s how to reduce healthcare costs

The recent White House-Congressional fiasco epitomizes the lack of basic understanding regarding healthcare and healthcare reform. 

Further reading: Cost, not access, is underlying problem facing American healthcare

Obamacare (ACA) and the Republicans’ AHCA, each with its pros and cons, are more like “health insurance coverage reform” or “healthcare payers reform” rather than healthcare reform for patients. Offering “coverage” is different than offering “real access” to receive efficient, quality, compassionate healthcare in a timely manner. 

Just because someone has an insurance, Medicare or Medicaid card, does not necessarily help him or her get an appointment for treatment in an efficient, timely manner. In addition, it does not guarantee the patient can afford the co-pay or deductible required before he or she is examined. The goal of our healthcare solution is to offer access at a sensible price.

In 2004, the United States spent $1.7 trillion on healthcare.¹ In 2008, we spent $2.3 trillion, or 16% of Gross Domestic Product (GDP). In 2016, we spent more than $3 trillion. It is not that we are not spending enough money on healthcare, the problem is that we are not spending the money wisely. There is wastage, redundancy, inefficiency, bureaucracy, and perhaps, even charging more than necessary in some sectors. We have to align the long-term incentives of insurers, payers, providers and patients. We need to restore trust between parties. Otherwise, we shall continue to be in chaos regardless of how much money we spend in healthcare. We are reshuffling the deck chairs on the sinking Titanic. 

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As Warren Buffett once told me at a dinner meeting, “each person comes to Washington to look for more money in healthcare; no one comes to Washington to reduce the unsustainable skyrocketing cost of healthcare.” This skyrocketing cost has already made us less competitive in the world economy. It is not necessary for finger pointing. If we all collaborate, it can be achieved without too much sacrifice from each sector of the healthcare industry.

The following is a plan to reduce healthcare cost by 28%, making it much more affordable. This will make “healthcare insurance coverage reform” and “healthcare payers reform” easier.  Thus, a “replacement” or “improvement” of ACA can be achieved less acrimoniously.

Next: Streamlining and expanding Medicare

I.               Streamline the current manner in which providers bill insurance companies, Medicare, Medicaid or patients. It is a very convoluted and expensive system. To illustrate simply:  A $100 item is billed out between $1,500 and $2,000 or sometimes more. After months of back and forth and mountains of paperwork, consuming millions of hours of computer time, the bill is settled for $125.32, part of which is paid by the insurance carrier or Medicare and part of it by the patient’s co-pay or deductible. There is a simpler way. 

President Bill Clinton once said that eliminating this mountain of paperwork could save 30% of the healthcare dollar. To be conservative, simplifying the medical billing system would save at least 20% of the healthcare dollar, bringing relief to both the payers and the providers...a win-win situation. The poor patients would be relieved.

II.              The surge of hospitals charging very high “facility fees” has exacerbated the skyrocketing cost of healthcare. It is not uncommon that the facility fee is 5 to 10 times the fee charged by the doctor for an office visit, which does not require the use of an operating room, emergency room, intensive care unit or an admission for an overnight stay in the hospital.

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III.            A certain percentage of non-cosmetic elective surgeries, not tests, may be unnecessary. This amount is considered enough not only to raise the cost of healthcare, but also causes pain and suffering, potential complications and absenteeism from work. I realize each surgeon believes that she or he does not perform such unnecessary surgery, it is the other guy. Medical Societies have started to produce evidence-based clinical guidelines to decrease unnecessary surgeries.  Introducing appropriate common sense, non-draconian “pay for value” instead of “pay for volume” reimbursement could be the first step to decrease healthcare costs, or perhaps, a hybrid of the two methods. At the same time, we need to diminish the cumbersome and unnecessary mandates imposed by the government such as Meaningful Use, MACRA and MIPS. As one national leader advocates, too much regulation stifles productivity. There is a simple way to achieve value.

IV.             A pill produced by the same company is sold in the U.S. at a cost multiple times of the same pill sold in other countries. We understand fully that the cost of developing a new drug is prohibitive. Is there a solution for all parties if we all work together?  We should take a good look at the arduous process of developing a new drug. Will the application of a modified “favorite nation clause” help? We need Solomon’s wisdom to create a win-win for industry and patients.

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V.              Expanding Medicare for younger and healthier people to buy into it will help to sustain and stabilize Medicare. We are not proposing free healthcare for all. As it is, Medicare has an adverse selection actuarially of its members. Insurance companies, expert on actuarial science, are needed at the table to decrease healthcare costs.

VI.            Rather than allocating different budgets for Medicaid, block grants, debating whether it is federally or state funded, could we explore the mechanism for all licensed providers to donate a percentage of their time and resources to take care of the less privileged, the way it was done in the ‘50s and ‘60s? 

Next: We are all patients, whether in the past, present or in the future

We could expand the system to encourage more recently qualified doctors to serve in the U.S. HealthCorps for two years, caring for the less privileged and in areas having insufficient doctors. In return, these doctors could get their student loan forgiven. Besides, it gives these doctors great satisfaction and experience like those who served in the armed forces or U.S. public health services prior to the 1970s.

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VII.          Deploy telemedicine. The current sporadic practice of medicine through e-mails and text messages can create slipshod medicine leading to errors. Both patients and providers can be distracted while e-mailing or texting and there is no opportunity to dialogue properly. Instead, introduce a new method, deploying virtual visits via Skype or FaceTime at an appointed time so that both patients and providers are concentrating. This also creates the appropriate medical record keeping. The provider should be compensated but at a more cost-effective rate, as overhead may be lower. This will decrease healthcare cost and make it more convenient for both providers and patients. Furthermore, the patients do not have to miss work.

VIII.         We should also deploy more nurse practitioners and physician assistants who are well trained in the specialty in which they practice. It has been pointed out that a generalized nurse practitioner or physician assistant can lower the quality of healthcare. A well supervised specialty trained nurse practitioner or physician assistant can lower the total healthcare cost for the country and at the same time maintain quality of care as well as improve access. Another win-win.

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IX.            The modern health information technology with “machine learning,” artificial intelligence, more user friendly interface and enhanced connectivity between providers, e.g. the Department of Defense and the Veterans Administration can facilitate aspects of the above to cut costs and increase efficiency.

The above is not a panacea to completely cure our healthcare chaos. It took us decades to get here, but if we all chip in, we can reduce healthcare costs by at least 28% of over $3 trillion without significantly compromising, and instead, increasing the quality of healthcare. 

Simplifying the medical billing alone can save 20% of healthcare cost, helping payers and providers achieve a win-win. The above could be a first step to bring parties together in a round table to improve healthcare for the patients. We are all patients, whether in the past, present or in the future. Once Democrats and Republicans, conservatives and liberals, work together on the above nine points for the common good, the debate on ACA and AHCA will hopefully be more cordial. 

Reference:

1.     Otolarygology-Head and Neck Surgery (2009) 140, 775