Many of the problems in U.S. health care are the direct result of the way Medicare pays for things. The payment system adopted by the Medicare End Stage Renal Disease program at its creation in 1973, for example, was likely responsible for radical changes in the way dialysis was performed. It fueled the expansion of stand-alone centers, an option that had been tried and found both more costly and less convenient. Had Medicare subsidized patients directly using a Cash & Counseling arrangement, it is likely that today’s kidney dialysis would cost less and be more convenient.
As Christopher Blagg tells the story in Replacement of Renal Function by Dialysis (Claude Jacobs, ed. 4th edition, 1996), the first free-standing dialysis center opened in Seattle in 1962. Once a reliable arterial pressure monitor became available, it became possible to do overnight home dialysis. This helped people lead more normal lives. It was more convenient because the patient could sleep at least some of the time.
The University of Washington team quickly determined that home dialysis was much less expensive than outpatient or hospital dialysis because it “did not require nursing staff.” The Seattle Artificial Kidney Center developed a home hemodialysis training program. The Center’s Board of Trustees determined that this would allow its limited funds to treat more patients, and it pioneered the notion of “home hemodialysis helpers.”
Because the Center did not have to play “Mother may I” with gaggles of government bureaucrats, home dialysis spread quickly. Survival rates in home dialysis were reportedly “at least as good, and probably better than survival with other dialysis modalities.” Blagg notes that “home dialysis patients had a better quality of life and were more frequently judged to be rehabilitated than were patients treated by outpatient dialysis.” There was also less exposure to potential sources of infection.
Because pricing and staffing were free from bureaucratic control, home dialysis even adjusted to the change in family structure caused by the entry of women into the labor market. It did so without needing additional subsidies or government programs for workforce development. As Blagg tells the story:
Another home hemodialysis development pioneered in Seattle was the use of paid dialysis helpers. In the 1960s and early 1970s home hemodialysis was usually done by the patient with assistance from their spouse, other family member or a close friend. However, with increasing return of women to the work force and other changes in family structure and society, spouses or family members often were not available or willing to undertake the responsibility of helping with dialysis. The answer to this problem was to have the patient hire a home dialysis “helper” to assist them. The helper was trained with the patient to do safe dialysis just as family members were, and no effort was made to have the helper become a trained dialysis technician. The helper worked for the patient as an independent contractor, and was reimbursed for their time through the patient. This proved to work extremely well and allowed many patients to do home hemodialysis who might not otherwise have been able to do so…The proportion of patients treated by home hemodialysis peaked in the early 1970s. In 1971, some 42% of the 10,000 or so dialysis patients were on home hemodialysis.
These promising developments came to a screeching halt in 1973 when the US government decided to help kidney failure patients. Rather than providing patient vouchers for ESRD care, it imposed the Medicare payments system on the market for dialysis. And, inevitably, Medicare pricing czars failed pricing 101. As Blagg puts it:
…[they] provided much more generous funding for outpatient dialysis than for home dialysis. This led to a rapid proliferation of dialysis units across the country, vastly improving patient access to treatment, but at the same time leading to the decline in the use of home hemodialysis…