Wal-Mart Care
Can Wal-Mart provide us with health care as efficiently as it furnishes us with paper towels?
According to a Kaiser Health News report:
Wal-Mart — the nation’s largest retailer and biggest private employer — now wants to dominate a growing part of the health care market, offering a range of medical services from basic prevention to management of chronic conditions like diabetes and heart disease, according to a document obtained by NPR and Kaiser Health News.
But then the next day, according to Kaiser, the company started backtracking:
The only thing the company would say for certain is: “we are not building a national, integrated, low-cost primary care health care platform,” according to the statement from to John Agwunobi, senior vice president and president of Wal-Mart U.S. Health & Wellness.
I’ll get to what Wal-Mart might be thinking in a minute. First questions first: Can Wal-Mart provide care that is of higher quality and lower cost than conventional provision? If so, how?
My answer: Wal-Mart can indeed improve on the current system. But here’s the catch. It can do so only if it continues doing what it and other retail medical outlets are already doing: ignore the third-party payers. Almost everything that’s wrong with our health care system is the direct result of third-party payment; and some of the most striking examples of efficient care are emerging in those parts of the market where third-party payment is either nonexistent or of marginal importance.
So as not to be misunderstood, I am not saying that our problems are being created by health insurance. There is nothing in principle wrong with insurance. The source of our problems is using insurance companies to pay medical bills. It’s insurance companies acting pro emptore — in place of the buyer.
Life insurance, for example, plays a useful social function. But we don’t use life insurance to pay for coffins, caskets and funeral services. There is a lot wrong with the funeral industry. But none of it is caused by life insurance. As I previously wrote in response to a comment by Uwe Reinhardt:
I have life insurance. But when I die, the insurer is not going to pay for my autopsy, my cremation, the urn that will hold my ashes, or the cost of the plane needed to sprinkle my ashes over the Princeton University football field (or some other suitable place). Instead, my wife will get a check.
When insurers become buyers of care instead of insurers of care a number of things begin to change, all of them bad:
- The provider becomes the agent of the third-party payer, rather than the agent of the patient — even shaping the practice of medicine to the third-party’s view of how it should be practiced.
- The provider no longer competes for patients based on price.
- Absent price competition, the provider no longer competes for patients based on quality.
- Overall, the provider’s incentive is to maximize against reimbursement formulas rather than provide low-cost, high-quality care.
Doctor, doctor
Give me the news
Most people (even most health policy experts) have no idea the extent to which third-party payment makes efficient provision of medical care impossible. Here is an excerpt from one of my previous posts:
Misa and his team thought they had the solution: a “concept clinic” that uses doctors for only the most complex cases, and steers most patients to nurse practitioners and physician assistants… Then they did the calculations: What if Park Nicollet had used this model in 2009, when it had about a million total patient visits to primary care; and if everyone had paid Medicare rates?
They discovered that the concept clinic would have run at a 40 percent loss; about the same as the current model… The problem, in part, is that Medicare payments also drop under this kind of model; it pays less for visits with nurse practitioners than doctors. That ate up any savings.
The perverse incentives work both ways. They not only discourage conventional sources of care from becoming efficient, they discourage efficient care givers from accepting patients who rely on third parties to pay their medical bills. As Tom Saving and I wrote in The Wall Street Journal earlier this year, most walk-in clinics won’t accept Medicare enrollees and almost none accept Medicaid enrollees because of their low payment rates. (Yet if Medicare and Medicaid would pay the market price — or allow the patient to pay a “balanced bill” to reach the market price — care would be more accessible for the elderly, the poor and the disabled and the government would save a lot of money in the process!)
Fortunately (at least for efficiency’s sake) a lot of people are paying for a lot of care out of their own pockets or out of medical savings accounts of one sort or another. As a result, there are about 1,300 walk-in clinics nationwide (see the graph below via Sarah Kliff at Ezra Klein’s blog). These include about 140 Wal-Mart clinics, CVS Caremark’s nearly 550 Minute Clinics and Walgreen’s 355 Take Care clinics. All of these clinics post prices; they keep records electronically; most can prescribe electronically; and, according to one study, they provide more reliable care than conventional primary care physician’s offices. [See our previous reports here, here and here.]
So what is Wal-Mart up to? I previously reported that a lot has been going on at Sam’s Club — generally below the health media radar screen. For example, in June they offered the following screenings to male customers at no charge:
- BMI Index measurements,
- Blood pressure tests,
- Cholesterol readings,
- PSA (prostate cancer) tests, and
- TSH (thyroid stimulating hormone) tests.
And, here’s the schedule they have been following since then:
- July: Kids Health Screenings
- August: Vision Health Screenings
- September: Diabetes Screenings
- October: Women’s Health Screenings
- November: Digestive Health Screenings
Wal-Mart is clearly testing the waters.
Don Taylor just posted on this topic at The Incidental Economist here:
http://theincidentaleconomist.com/wordpress/a-business-idea-for-wal-mart/
I agree that Wal-Mart could probably greatly improve on the current system.
Interesting idea.
How would you stop insurers from being purchasers of care?
How does Walmart figure to make money from these free services? Attract new, perhaps wealthier customers for other products? Attract customers for future, different medical services that will be charged for?
It will be very interesting to see how this affects Wal-Mart’s business model
The answer is probably no. But it’s not because a firm like Walmart — over the course of many years — couldn’t streamline health care like it did retail distribution. Walmart is not entering a field free of regulations. I think it’s safe to say most physicians don’t want to work for Walmart; they don’t want to work the patient-friendly hours Walmart would demand they work; not do physicians want to compete with Walmart. Medicine is highly regulated and the regulations are shaped by those who currently dominate the field. Walmart can tinker around the edges — competing for patients the medical establishment doesn’t want. But I don’t believe it can change the delivery of medicine.
Healthmart would be an interesting thought experiment. But in the current regulatory environment, there’s not much Walmart can do that is different than what is currently being done by firms like RediClinic or MinuteClinic.
If wal-mart offered this service, sales could potentially go up in their retail section. It brings in more people to their stores, and while they are for a check-up, there is a good chance the individual will spend at the store as well.
This is already done with 3 to 5 dollar generic drugs.
Does Cub send the results of these screenings to the patient’s primary doctor, either internist or family practitioner? Does anyone know?
great article John,
I would bet on Walmart. They will have to make sure they are taking care of the walking well, and not missing latent disease like cancers or congestive heart failure, but I would bet they can do it. The other thing that impresses me is that it is basically a cash and carry, pay at the door business. No middle men. No quality intermediaries. It really simplifies basic medical care economics to a provide and patient, without intermediaries pressuring physicians, and massive bureaucracies requiring data, space, employees ect.
Also the young medical people I have met are at least as competent and probably more thorough than most physician examiners these days, when MD’s are obsessed with data entry. I know Obamacare will provide only taxation and bureaucracy and set back medical access considerably achieving their control of access.
Walmart, which is located in population centers, will have support medical care to back them up. This will take us back to the doctor office type of practice of 40 years ago. Of course, neurosurgery and other high super-specialty procedure will require lots of physician training.
Great article
If health insurance works just like life insurance, how would it pay off for a given service from a given doctor? It would still be selective about what it considered a proper price for a given service. Life insurance is strictly a one-time payment decided long before payout time at a cost commensurate with the insured’s income. I don’t see the analogy.
Not to make presumptions about John Goodman’s intentions in writing this piece, but I don’t think this is so much about Wal-Mart’s ability to deliver quality care in some scenarios as it is to clarify and emphasize that the real problem with healthcare stems from the complete reliance on third party payment.
That Wal-Mart or a traditional physician’s office would deliver the most cost effective quality healthcare in defined situations could only be determined if both were to be interfacing directly with the patient.
If my presumption is correct, congratulations to John on coming up with a creative way to get the point across.
As long as provider reimbursements are directly and indirectly tied to government prices (mainly Medicare)we will have a hard time achieving the effiencies that WalMart could produce. CPTs, DRG, and ICD9/10 reimbursements are derived from how Medicare pays. Commercial contracts generally relate overall to those govcernment payments. If a provider reduces the cost of services, those reductions play into subsequent government calculations for reimbursements which then feed into commercial reimbursements. There is no incentive to be cost efficent or use alternative providers except if one is community minded and willing to get paid less. That is a business model with limited life. The not-for-profit hospitals don’t revamp their services so why expect a for-profit to do it? Fixed payments to consumers with them paying the providers would change the game, but how do providers get assurance that they will be paid? Can healthcare be delivered under a loan guarantee?
@G. W. Ingram
Mr. Ingram, I think you miss the crux of the analogy. But if you think life insurance/health insurance analogy is inapplicable, perhaps you should look at it in a different way. You note that health insurance pays a “proper price for a given service”. That is precisely the problem, the micro-management of individual healthcare encounters.
Health insurance “could” function in much the same way as life insurance if it concerned itself with “insuring the insured for losses incurred from medical expenses” rather than making the provider of services the de facto insured. This is best accomplished through the use of high deductibles before insurance even comes into play. “Insurance” is a term that is correctly applied only when there is an intent to shift the risk of “unexpected catastrophic losses” to a third party, and assigning a $100 doctor office charge to an insurance company certainly doesn’t qualify. The incorrect general acceptance of this type of ill-advised financial transaction as “insurance” is at the core of the problem.
Sirs: It is not correct to compare health insurance with life insurance, because, by definition, life insurance pays once. As people receive multiple health services over time, it is actually a smoothing of what would be intolerable peaks and valleys in healthcare billings. The stage we are in now is definitely a return to patient payment for primary care, with insurance taking on more of a catastrophic role.
As to the idea that patients should be paying providers directly and choosing for price, requiring at least a pair of providers from which to choose on price, these higher end services cannot be provided economically everywhere in every community, nor would we have the manpower to do so. There are only so many pediatric retinal surgeons, or cancer specialists who only do brain tumors. As these are usually one time problems, insurance of the kind we have is appropriate. Insurers do provide a useful function as otherwise the patient would be at the mercy of providers who will charge what the market will bear. There’s a fashion cycle as to who will be blamed for the present state of healthcare costs, either the consumer, because of poor lifestyle and choices, or the provider, for giving too much care and not doing enough to prevent illness, or the health plan, for being too complicated, not having standard forms, and being too nosy about what physicians are doing.
So much of this is anecdotal, and little thought is given to the dysfunction we would have if all insurance functions were handled by a single carrier, or all patients would have to negotiate prices with every provider they use, or all doctors get to set their own prices. We have more than 1800 separate insurance plans, many of them local and developed by community groups to suit their own needs. We have more than a million separately-licensed health providers, both professional and institutional. With 310 million people in this country, the chances that everyone paying directly for all of their care and getting it right all of the time is a minus factorial of all those numbers. Think of billing as a communication of what was done and when to whom. Without fee for service, it is hard to tell, as a patient, whether you received all that you should for your condition. That is why the usual indemnity insurance has been over-shadowed by the managed care model using capitation payments. That it does have an incentive to under-treat is well known, and patients are known to opt for out of plan services. So there is a lot more choice in healthcare at all points than is given credit for.
There are few people or families who could pay cash for each type of health service, and fewer still who would receive a check from the insurance company to pay the provider without skimming from it to buy a 3-D TV.
Would you want a world in which the state took over the day to day supervision of patient care to “protect the consumer?”
Cheers…
Wanda J. Jones, MPH
President
New Century Healthcare Institute
San Francisco
John:
You maintain that, “when insurers become buyers of care, the provider no longer competes for patients based on price.” As a former practicing physician, I would disagree. In most instances, the physician who turns down a contract for insured patients does so based on price. When the physician next door accepts the identical contract, he is competing based on price. Success of the insurer in obtaining a lower price is due directly to patient volume. You are correct that, in most instances, quality is not a primary part of the equation.
You seem to be suggesting that, in the absence of the insurer as buyer, individual patients would obtain better pricing from providers. In my experience, the opposite is true. “Retail” pricing by hospitals, physicians, and labs to individuals is several times that to government and private insurance groups. (EOB’s confirm this.) Your faith in a medical market driven by individuals or the altruism of providers is greater than mine. Few individuals understand the complexities of medicine and medical economics and few physicians can afford to be altruistic in the Medicare/Medicaid fee environment.
Tom Newsome, MD
@ Wanda Jones,
“Would you want a world in which the state took over the day to day supervision of patient care to “protect the consumer?”
I think that is exactly what quite a few folks on the left are trying to get done.
Ms. Jones, there certainly is a lot of anecdotal sound byte blame, but the facts are that we have been moving steadily toward the model you describe above for the last 40 years. Further, very little consideration has been given to the notion of giving a different healthcare model the opportunity to develop. The third party centered model is always the basis for any new approaches. Ted Kennedy and the left tried its best to euthanize the HSA concept before it could get started. HMOs, Obamacare, Romneycare, and hundreds of similar managed care schemes have been tried to get us where we are. There seems to be this continuous obsession to tweek this and that, but never to seriously consider that the basic presumption of the necessity of everything starting and ending with third party involvement is simply wrong.
As for the idea of “patients paying providers directly and choosing for price”, why not? Although you are right that the myriad of considerations makes some decisions very complicated, people can have advocates that help in the process that are not economically biased. Not so when HMO’s, carriers or the government call the shots.
I’m not saying that healthcare lends itself completely to laissez faire economics. But why not err on that side and make adjustments rather than
vice versa?
My dry-cleaner’s wife has high deductible insurance and wished to preserve her income. Thus on routine care she gets the bargain mammograms etc. and deals on a cash basis with physicians. A while back she needed a sonogram and an MRI on her leg with a few other things. I was not shocked that at that time the prices she got were lower than that paid by most insurance companies.
The insurers being the predominant payer pay the provider his expenses and provide a profit. Thus an individual trying to purchase low cost care can offer the marginal price with less profit and generally find someone willing to oblige. I have seen that in the field of imaging quite frequently. In fact if physicians didn’t have to accept insurance they could probably save enough administrative costs to lower prices even further.
Hospitals are another story. There is a game going on between hospitals and insurers. Neither want the price to the uninsured to appear low. It makes one’s insurance premiums appear reasonable when the person sees a bill for $100,000 that the hospital may only be paid $10,000. With a bit of transparency hospital bills to the uninsured would drastically fall.
Walmart Primary Care….
Do any of you use a Walmart healthcare provider for medical services? Would you have your parents or children use them as their medical home?
Do you really think they will become the gate keepers for basic prevention and management of chronic conditions like hypertension, diabetes, heart disease, depression, etc?
If you don’t or won’t in the future, then you may want to reconsider commenting on what’s best for others’ healthcare…..ie, practice what you preach….
Soon they will be saying,
“Ask your healthcare provider at Walmart” instead of ask your doctor….
I’ve been to CVS minute clinics and their care was fast, efficient, and effective. As good as my PCP of 30+ years for what I needed.
Colds, allergies, skin diseases, well-woman exams, etc are one thing…
But when patients are really sick, they need to contact their physician right away….
And, if you were shopping at Walmart, would you really want patients walking down the aisles with the flu??
That’s how we start epidemics…
That is why we need more primary care physicians with smaller practices….concierge…where the patient decides whether unlimited access to primary care at a reasonable price is worth it….
Dr. Newsome: You are confusing chargemaster prices, as presented to a patient, with prices that uninsured patients actually pay. Previous research (http://www.pacificresearch.org/blog/id.301/blog_detail.asp) indicates that most uninsured patients pay none of their bill and a very small share of them pay the entire bill.
When a hospital generates an invoice for an uninsured patient who had not previously negotiated his stay, they generate an invoice from the chargemaster to comply with Medicare’s and private carriers’ rules granting them most-favored status. They do not expect to get paid.
@ Charlie L
I wouldn’t stop insurers from doing anything. I would change the tax law to create neutralilty between third-party insurance and individual self-insurance.
@ Buster
Have more faith.
@ Bob blandford
How will Wal-Mart make money? Just like they make money on paper towels. Also, see Simon’s response.
@ moey
The idea is still on the drawing board. But with electronic medical records, it’s easy to send test results and other information anywhere.
@ Dr. Brody
Good perspective.
@ Frank Timmons 1
Thanks for the kudos. You are right. The real issue is third party payment.
@ G W Ingram and Frank Timmons 2
I agree with Frank’s response.
@ Ron Bachman 1
Agree totally. This is all about the ability to repackage and re-price services outside of the third-party payer system.
@ Ron Bachman 2
Glad your CVS experience was so successful.
@ Wanda Jones and Frank Timmons 3
I won’t elaborate here (See “Designing Ideal Health Insurance”), but the best model for health insurance is what I call the causualty insurance model — similar to the kind of insurance you have on your home or car.
@ Dr. Newsome and John Graham
Contracts between doctors and insurance companies are little more than agreements about reimbursement formulas. They are not the same thing as doctors competing for patients based on price.
I agree with John Graham’s response here.
@ AL
Agree. Smart shoppers can often get prices that reflect marginal costs.
@ Chris Ewin 1
You are assuming too much about what the product will look like. It might look just like your office.
@ Chris Ewin 2
Does walking down the aisle with the flu at Sam’s Club put others at any more risk than coughing and wheezing in a doctor’s office waiting room?
John Goodman writes: “@ Chris Ewin 2
Does walking down the aisle with the flu at Sam’s Club put others at any more risk than coughing and wheezing in a doctor’s office waiting room?”
John, a patient in a physicians office that has the flu can always be given a mask and if actively coughing can be placed in an empty room. That is what I always did. That is a quality improvement that is simple, inexpensive and saves a lot of money by reducing the possibility of illness. Thus I would say regarding this comment Chris is entirely correct. I love low tech, but there are no payment plans for such treatment except one’s own satisfaction.
In my partial review of the Federal Register I didn’t note my suggestion as one of their points to review despite the fact that the flu can kill a seriously ill cardiac patient while many of their metrics simply check to see if data was obtained, but not evaluated to see how the data was used.
@Al,
Hate to tell you this, but the families and children buying groceries are full of germs, colds, flu, etc. I used to think that would prevent mini-clinics from opening in grocery stores and pharmacies (where many do light shopping), but that does not seem to be a practical problem. Besides, like Costco they can easily open a separate section like they do for liquor or tire sales.
@Ron Bachman:
“Hate to tell you this, but the families and children buying groceries are full of germs, colds, flu,”
True, but do you not note how health officials advise people not to go out when actively sick with the flu to prevent infecting others? Suddenly having larger quantities of the sickest patients is a higher risk. We are talking about risk reduction not the total elimination of risk. Do you understand the difference?
John, your message is most insightful. Thanks for your continued efforts to inform all of us “what is not said”. Les Keepper Jr.
@Dr. Al
You asked,”Do you understand the difference?”
Yes.
Do you understand reality and do you accept that risk reduction could occur outside of the physicians office? Access to care is important to risk reduction. New medical business models can work (e.g.WalMart, KMart, Target, CVS, RiteAid, Costco, Sams) without the high cost and overhead of traditional providers and centers of care. I believe in choice, options and personal responsiblity.
@ Ron “do you accept that risk reduction could occur outside of the physicians office?”
Ron, I suppose if one were to check your knee jerk reaction with regard to ideology your toes would hit the ceiling. My comment had to do with public health and limiting exposure to public health threats. It just so happens that Chris is correct. Though I have my own feelings regarding Walmart they were not expressed in my remark. My comment had only to do with the relative safety of the public and such a concern will eventually be addressed and remedial action might be taken as well.
I frankly don’t care where you get care and whether or not the person is even licensed. That is your business as long as you keep your business to yourself and don’t bother me with any problems that might arise.
@Al,
Thanks for your clarifications.
You must have gotten an A+ in bedside manners.
@Ron,
Not everyone places bedside manner above ability. In any event my bedside manner is fine A+, but in this case you weren’t paying me. It was free, thus there was no need for bedside manner. Remember that the next time you think about free care.
@Dr. Al – I was trying to give you a complement. I guess the value of your medical charity comes through. First rule of medicine – do no harm, or is it pay for performance?
@Ron, “or is it pay for performance”
If you want that find an organ grinder. I’m not a monkey. Instead I offer a service that can be accepted or rejected by the patient whose life I am treating. All get the same, my best…. and good health to you.
This discussion brings us back to what is important to healthcare providers (Docs/pharmacists/NP’s/PA’s/etc) and patients…Access to quality care at a price determined by the patient.
It is a systems problem in primary care. It’s a fee for service problem. HC providers don’t get paid unless they see the patient.
Patients love to be treated by staying home in bed when they are sick. B/c we know our patients, concierge Docs can treat their patients over the phone and they have access to us every hour if need be…..
Docs suffer from the Mother Theresa Syndrome. Often, they treat patients for free. I may be wrong, but one wonders whether the hc providers that work at Walmart/CVS/primary care clinics will be doing the same or just punching the clock and going home at 5:00pm.
Unfortunately, the same is true for so many physicians and other primary care providers. It’s changed…understandably…If you can decrease the hassles of running a practice and have more quality time, than of course there is an attraction… you just get paid less after all those years of study…
@ Chris Ewin 1
You are assuming too much about what the product will look like. It might look just like your office.
John,
Back at ya….Offices can look the same….It’s continuity of care, breadth of scope of practice and having a direct and personal relationship who will guide you and your family through life’s maladies.
John, where does the fault lie? It lies with everyone involved being the culprit’s. The medical profession’s inability to monitor, police and discipline itself. It is the fact that the insurance industry has emasculated the medical profession, putting all the docs in their special silo’s without even paying lip service to the concept of quality among providers; and inferring that all the docs in their own special category of equal value, and saying that medicine is a business, not a profession. The fact that they feel that physician extenders are as good as doctors, and even publish in the mainstream medical that you can get your check-up, immunization, and lab work by just walking into a “doc in the box” for their care. The pharmaceutical industry tells doctors or other care providers what drugs they are pushing or medical devices that they want you to prescribe, usually with a sub rosa or under the table gimme for the doctors to use it. The billboards touting this hospital for cancer, another for heart disease, and yet another for orthopedic expertise. And the latest is a CMC billboard in pink touting that they are special place for heart surgery. My problem is that I thought that doctors take care of patients, not hospitals. And the incredible cost of those billboards takes away the added PR to attract patients. It is basically saying, I want to have my brain tumor surgery done at hospital xxx. Since when is the hospital more important than the doctor with the best reputation? Do you think that a doctor whose hospital he is on the staff of would not allow his patient to go to a physician at another hospital yyy if he enjoyed a better reputation? The most important thing is revenue for the institution. The economic model is a business oriented model which does not work in healthcare. and finally the employers and employees are to blame for they no longer honor or are appreciative enough to let them off the hook? And last but not least is the government’s intrusion into health care. For example a PCP who has many medicare patients cannot earn a living by providing enough time for the patient to go over his symptoms, and make a clinical diagnosis. With reimbursement so poor, a thoughtful doctor wants to make a clinical judgement to then corroborate it with the necessary lab studies. So, because of the limitations on time, he is forced to jump at a diagnosis, which then all the testing does nothing but add to the expense of obtaining information that a good history and physical would provide. The per capital cost in Dallas, which is the unnecessary testing, and utilizing the outrageously unnecessary with knowing full well that all it will do is to avoid litigation, and provider greater reimbursement.
Just remember Kramer’s rule of seven; 1.do the right thing to 2.the right patient, 3.at the right time, and 4.for the right reason, 5.in the right place, by 6. the right person, and at the 7.right price.
John and Devon,
Robert is right on target….and well-said.
I completely agree.
The patients we see in primary care have multiple problems like Cancer, HTN,DM, Coronary/Carotid Artery Disease, Stroke,Dementia,Infectious Disease, etc…
Those advocating primary care at a Walmart setting really don’t understand the concept of a medical home and taking care of 85% of a patients/families really don’t understand the scope of the problem that Mr. Kramer has outlined well.
The nature of medical school training, residency, and a lifetime desire for self-study is a completely different skill set than the less rigorous training of other hc providers that are being placed in walk-in/hospital settings. It is understandable that it’s difficult to a run a practice with all the regulations
that are being imposed on Docs.
That may be one of the reasons so many med students don’t choose family practice/primary care internal medicine when it is the most needed specialty in any country…especially to decrease costs (again….concierge Docs decrease hospital admissions by 65%).
Those making decisions and promoting this simply don’t understand the nature of true primary care…The fee for service model for primary care has failed.
The best models are quality-driven, not volume-driven.
Kramer rule # 5 applies…most of the ?’s from patients and families need to be answered right away by their physician including review of a care plan/labs/MRI…and review of these right away with the specialist so needed and appropriate tests are done before the patient see.
It’s all about patient care.
Examples are numerous…
Kramer # 3 and 5 applies…however, the answers to f/u results of tests like biopsies, MRI’s, labs, Xrays, etc need to be reviewed asap…
Begin forwarded message:
@Chris: “The fee for service model for primary care has failed.”
Chris the fee for service model in a free market hasn’t existed at least since WW2. I don’t see why the health care market cannot function almost the same as any other sector in the economy.
Robert, notwithstanding all the important points you make in the shortcomings of how medicine is currently being practiced, trying to remove it from the “business” category is a non starter.
I don’t think that the terms “profession” and “business” are incompatible. The fact is that anytime a product or service is being provided in exchange for payment the definition of “business” applies, and all the associated economic laws of supply and demand are part of the equation.
Perhaps the failure of all parties in recognizing this is the major reason we have the healthcare funding mess we now have.
By far and the most important lesson to learn::::::::
PHARMACISTS>>>>>>>PHYSICIANS
Thirty years ago, pharmacists ran their own pharmacies and business….
When large retail stores moved to their areas, they were allowed to move their pharmacies into the stores and run their own businesses. Their patients continued to come to their hc provider (their trusted pharmacists)
Subsequently, they were acquired by the store and no longer ran their business. They lost control and salaries/independent practices for pharmacists working in a retail setting went away. Pharmacy students (all are PharmD’s) look forward to shift work at a retail store…Hopefully, MTM (Medical Therapeutic Management) with PharmD’s may help them use their clinical skills (working closely with physicians).
The same is true with hospitals and now retail stores buying physicians’ practices and then the physicians become the employee.
It’s sad for primary care b/c of all the reasons we discuss on this blog. It’s the tragic decline of primary care and I admit…it’s a consequence and trend that inevitably will become accepted as the most common primary care model…
Happily, pcp’s still in practice can transition to models like direct fee for care models (concierge) instead of the constraints of fee for care models who are being acquired today….I know as past-president of AAPP…the American Academy of Private Physicians (not pissed-off patients), the organization for concierge physicians..
I know this pharmacy story b/c I previously was medical director of PDX, a pharmacy software company in Fort Worth who provide software for over 60 small chain pharmacies (>10,000 stores)like (KMart/Albertsons/Tom Thumb/Winn-Dixie, etc…
This is a tragic game-changer for primary care…
Ask you primary care physician friends if they would want their children to do 7-8 years of med school/residency to work at Walmart…
John…would you want that for your children???
@John R. Graham
“Most uninsured patients pay none of their bill and hospitals do not expect to be paid.”
There are two groups of uninsured. In the first are the indigent whom you are addressing. Charges make no difference, for they do not intend to pay. In the second are the uninsured who can afford to pay a charge equivalent to that made to Medicare or a private plan. You are correct in that this group can often negotiate a fair charge at the physician’s office, the imaging center, or surgery center. As you note, however, the problem is that neither hospitals nor national labs will lower their outlandish retail charges because of most favored status arrangements with Medicare and private carriers. This places the self pay patient in an untenable fiscal situation. Somehow, this needs to be addressed so that he can swim and not drown in the medical marketplace.
Tom Newsome, MD
Tom, I have been told by hospital lawyers and administrators that hospitals can not offer the uninsured a discounted price for services, even when the bill for the uninsured is based on the ridiculous charge master (8-10 times cost). They can respond IF the patient is wise enough to ask for a discount. Of course, the patient is unaware of how low Medicaid pays so what discount are they to ask for? How is that a fair system. We need posted transparent prices that represent acceptable cash payments. Consumerism cannot work unless prices are known in advance.
Tom Newsome and Ron Bachman bring up some key issues that seem to get little attention. In fact I hope John Goodman does a piece on the shenanigans of restraint of trade prevalent with hospitals, carriers and the government programs that seem to be beyond the oversight of the justice department (the same justice dept that is quick to jump on communications companies that even hint of conspiring to fix prices or monopolize a product).
The obvious question is why “can’t the hospitals offer a discounted price for services”? Why can’t the prices contracted by Blue Cross, Aetna and UHC be made available?
This has nothing to do with protecting private contracts such as say a General Motors making a deal to provide X number of trucks to Fed EX for X number of dollars. Rather this is a scenario that involves carriers controlling both sides of the market (the production/providers and the buyers/insureds) to the exclusion of everyone else (other carriers and individuals as well as healthcare providers).
Medicare/Medicaid uses government power to dictate (control) prices to hospitals and doctors. Hospitals and doctors must make up the loss elsewhere. Blue Cross and the other BUCA say “not on us you don’t”, so they coerce hospitals and doctors into deep discounts by reminding same that their insureds represent the lions share of the health insurance buyers. At the same time BUCA bullies all other potential competitive carriers and alternative plan designs by reminding their customers that only they (BUCA) can deliver the “preferred pricing”. This preferential pricing forces higher rates by potential competition and further increases the BUCA monopoly on the market. Consequently they control both ends of the market.
And then we are down to the cash payers (or what ever is left after government programs and BUCA). Guess who gets to pay the gouged pricing?
Now what’s wrong with this picture?
True transparency would set the free market in motion to immediately bring down the cost and allow the customers/patients to select for quality and price.
Frank Timmins and Ron Bachman explain very clearly why, as a surgeon, I had difficulty offering patients a discounted package of fees for an operative procedure. If it involved a hospital, I could not, for the maximum discount was 5% off a ridiculous charge. On the other hand, the ambulatory surgical center owned by the same hospital could discount a reasonable charge for the same procedure by another 25%. The anesthesiologist and I could use rates equal to our lowest insurance contracts for a total package which was affordable. As long as the patient did not develop a complication that required hospitalization, all was well. Somehow, the hospital and lab segments the market needs to be opened.
Tom Newsome, MD
Megan, you’re on more solid gnruod when you stick to the libertarian taxation=slavery argument. Once you get into the practical matters, there are many other factors involved. There’s no way to say whether benefits for the older will actually increase under a universal health coverage plan. Maybe benefits for younger people will increase. Why is it almost certain that nursing homes and other things will be covered under a universal health care plan? The some people won’t need it argument is also pointless when discussing insurance. If everyone needed it, it wouldn’t be insurance.When discussing practical matters, you make your argument sound more solid than it is by only mentioning the negatives of universal health coverage. What about the inefficiencies of the insurance system? What about health care portability? What about the moral injustice committed when insurance companies negotiate low health care prices with hospitals and doctors, but the uninsured must pay full price?But leaving that all aside, you’re really just making the standard libertarian argument that all taxes are bad, and that individuals should just take care of themselves. In this case, even that argument faces difficulties, because in the ultimate free market, health insurance wouldn’t exist. Insurance companies would refuse to cover, or charge exorbitant rates to cover the sick, and healthy people wouldn’t buy insurance because (a) they’re healthy and (b) their rates would go up anyway once they got sick. In the end, we’d be faced with the choice between morally wrong health insurance for all, or morally wrong rolling the dice with everyone’s health. Personally, I prefer the first wrong, and when faced with that choice, I think most Americans would agree.
Luciana, you are right with your inference that “insurance” is a socialistic concept, and that it conflicts philosophically with free market principles.
In the evasive “Perfect World” there would be no insurance, but rather a system of regular monetary set asides from early life by each individual that created a large pool of reserve to fund whatever became necessary in later life. In other words, people would be responsible for themselves.
The problem is our societies have created to one degree or another entitlement states, and to that degree have robbed us of our ability to manage our own lives. What today passes for “health insurance” is a prime example of the atrophy of ingeniousness that entitlement creates. Rolling back this addiction whereever and whenever is advisable.
Many of the lgearst corporations around the world have resources that far exceed even some modestly well-off countries. Do they use them better? More ethically?What is “better”? What is “more ethically”? If the corporations didn’t use force or fraud, then it will be difficult for them beat the government at being unethical (in this an-cap’s book). That is not the same thing as impossible, mind you. Pressuring suppliers and/or customers does not count as the same thing as force in my book. If Kellogg’s refuses to comply with Wal-Mart’s demands, Wal-Mart doesn’t throw Kellogg’s in jail….the truth is that we have, as citizens, far more levers to use against the government than we have to use against the corporations, at least with respect to this one issue.That’s a bold claim. And even if true, the corporations have access to the same levers. That’s why I’m not sure that “something” is better than “nothing”, on this issue or any other.Granted, the reason folks like me dislike to cede ground and begin utilitarian arguments about the efficiency of health care systems is that it stipulates to the entire idea of government in the first place (which you address in your post). So maybe I’m biased.
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