What If A Junker Car Cost More Than A Porsche?

There’s at least one concept in ObamaCare that we should agree on.

Posted May 23, 2015

Imagine that you need to buy a car, and that you have a limited budget (not so hard to imagine!).  The dealer first shows you an old, beaten up sedan.  Then he tells you that you can have the junker car for $48,000.  Now you’re worried, right?  But then he shows you a brand new Porsche®, which is yours for $12,000.  After you ask him to repeat himself (twice), it sinks in:  the junker car costs way more than the new Porsche®.

Anti-American!  Anti-capitalism!  In our way of life, poorer quality costs less and better quality costs more.  Want a burger and fries?  Five bucks.  A fine dinner with wine?  Eighty.  A nice four bedroom home in an elite suburb is at least ten times the cost of that single bedroom out in the boonies.  We accept this relationship between cost and quality.  It is engrained in every aspect of our life.

Except one.

When it comes to our healthcare, the system is anything but “quality for a price.”  In fact, it’s the opposite.

In the United States, we pay more money for poorer quality care.  This is a dirty little secret that those of us in healthcare have known for a long, long time.

Let me give you an example.  I’m the surgeon you see because you need an operation to remove a piece of diseased intestine.  I do my job well, the nurses and other providers in the hospital do their jobs well, and following the uneventful surgery, you spend five days in the hospital and then are discharge home.  Your recovery goes well, and you’re back at work within a few more weeks.  That’s good quality care for which I’m paid for performing the procedure, and the hospital is paid for providing the operating room, equipment, staff, and room, board, and care following your procedure. 

Now let’s start again.  I don’t have my best day as a surgeon, and you suffer a preventable complication (Americans suffer 10,000 preventable serious complications each and every day).  This means that following surgery, you end up in the Intensive Care Unit.  And because of that complication, you need an emergency operation a day or two later.  Followed by ten more days in the ICU, then three weeks in the hospital before being discharged to a skilled nursing facility.  You’re finally home close to three months after your initial procedure, and you’re not back at work for another two months.  That’s preventable bad quality care.  And it costs more.  Way more.  Everyone (me, other doctors, nurses, the hospital) are paid for your second operation (necessitated by my preventable error).  The hospital and staff are paid for two weeks in the ICU (very expensive and, again, the result of a preventable error), and for three additional weeks in the hospital, and then in the nursing facility… Get it?  Poorer quality costs more.

It’s no wonder that this business model, called “Fee-for-Service,” is sending us over a financial cliff and laughing all the way.   Today, greater than 17% of our gross domestic product (the total financial worth of every good and service sold within the U.S. annually) is spent on healthcare.  First of all, with the current healthcare spending trend, this is not financially viable for our country for much longer.  And secondly, we aren’t even getting good value for all this doe!  In fact, we’re routinely ranked close to 40th in terms of the quality of our healthcare relative to other countries.  And preventable medical errors are still the third leading cause of death, killing 400,000 American adults each year.  Even outside of the hospital, our quality lags, as greater than 5% of Americans who see their doctor each year suffer an error in diagnosis, half of these potentially serious (such as missing a cancer).

The current Fee-for-Service model of paying for healthcare is just dysfunctional.  Imagine that you’re in a nice restaurant, and you notice that your spoon is dirty.  The waiter apologizes, seizing the offending utensil and whisking it away.  A moment later he arrives with a clean spoon, which he places carefully in front of you.  Following a delicious meal, you review your bill.  And there you see a charge for “Replacement of Unclean Utensil - $8.”  That’s our Fee-for-Service healthcare system.

I get it.  You hate every part of ObamaCare.  Or you love every part of ObamaCare.  (From my perspective, both misguided a views.)  Regardless, it is difficult to truly disagree with one of the legislation’s fundamentals:  tying provider payment to the quality of care delivered.  The Affordable Care Act (the official name of the law) recognizes that we can no longer afford to pay more for poorer quality care and proposes new business models (such as Accountable Care Organizations) to more directly link how much money doctors, hospitals, and other providers are paid to the cost efficiency and quality of the care provided.  But changing our 200+ year old healthcare payment system over only a few years is like turning the Titanic on a dime...

There are over 5,600 hospitals in the U.S., and they have always made money by filling every last hospital bed and Emergency Room bed with a patient.  And by caring for and performing thousands of lab tests, X-rays, and procedures on each and every hospitalized patient each and every day.  But even prior to ObamaCare, half of all American hospitals were losing money.  And with the new law, hospitals must suddenly remain profitable (or become profitable) by reducing hospital admissions, Emergency Room visits, and tests and X-rays, as we drive toward better quality (and lower cost) outpatient preventative and maintenance healthcare.  Imagine telling McDonalds® that our goal is for them to remain open (because we like burgers and fries), but that over the next five years, they must drastically reduce the number of customers… The goal may be right, but the timing and lack of proven replacement business models is, to put it nicely, “challenging.” (Forecasts of hospital closures are as high as one-third.)

A second significant problem is that today, many doctors, nurses, and hospitals practice “defensive medicine.”  That is, we order tests and studies that are likely of little or no value to our patients because we are scared of being sued should something not go perfectly in the patient’s care.  Americans are litigation crazy.  (My partner and I and our hospital were sued once by a woman whose cancer operation went beautifully and without a hitch.  She explained that she “loved us and got great care, but that her friends told her if she sued everyone, we would all forfeit our charges.”  The hospital did just that, encouraging others to simply sue to avoid paying for great quality care.  Disgusting.

Thus, physicians and hospitals begged our political leaders (most of whom are lawyers) to include tort reform in the ObamaCare legislation, protecting providers from frivolous law suits when we attempt to reduce the costs of unnecessary or low value tests.  Not surprisingly, the politicians refused, and most providers continue to waste our money by practicing defensive medicine.

Listen, I’ll be honest.  There are many things about ObamaCare that, as both a physician and an American, I truly dislike.  But we must certainly all agree that paying more of our hard-earned money for poorer patient outcomes is not only non-viable financially, it goes against the American philosophy in which the Porsche® costs more than the junker care.  In which the waiter replaces my dirty spoon with a clean spoon for free.

So it’s a new world.  The goal of aligning healthcare with the American philosophy in which quality and payment are linked is a good goal, regardless of your political affiliation.  The challenges, however, of shifting such a significant part of our financial system, of finding viable business models to ensure hospital survival, of reducing excess procedures and tests while still leaving providers exposed to uncontrolled law suits, all within an unrealistically short, politically-based timeline, are overwhelming.

But all that said…it’s a start.