Monday, June 29, 2009

RTRP Health Care: Quality Control

Today we finish outlining the problems our health care system faces. We have previously discussed costs and access. Today we address poor quality control and preventable medical errors.

Our system suffers from wasteful over-treatment, exposes patients to an amazingly high risk of under-treatment, and results in an incredible number of preventable injuries. The existing mechanisms for monitoring quality control are simply inadequate.

Over-Treatment Wastes Billions

As noted previously, over-treatment, i.e. the providing of medically unnecessary tests or procedures, wasted $500-$700 billion in 2007. Yet, as also shown, only a small portion of that amount -- between $6 billion and $66 billion -- can be attributable to defensive medicine, i.e. lawyers. The rest, according to a study by Dartmouth’s Institute for Health Policy and Clinical Practice, was caused primarily by the lack of clear national standards. Indeed, recent studies have shown that many doctors lack adequate information on the risks/benefits of common treatments.

This leads to inconsistent care, including both the over-treatment mentioned and under-treatment. Under-treatment occurs when patients do not receive care that is both cost effective and medically effective. For example, the Dartmouth study found that patients had just a 50% chance of receiving flu shots, where appropriate, or receiving aspirin or beta-blockers following a heart attack, or receiving antibiotics to treat pneumonia, even though these treatments are inexpensive and are well known to improve patient health in those situations.

Another recent study, found that doctors fail to tell patients about abnormal test results 7% of the time -- 1 out of every 14 tests. This study, of the records of 5,000 patients who were tested for high cholesterol, diabetes, colon cancer or breast cancer, found significant variances in the performance of doctors, with some failing to inform patients as often as 26% of the time. This inconsistency frustrates early diagnosis, which is the key to effective treatment.

Preventable Medical Injuries

More significantly, however, the lack of standards and poor supervision/ oversight lead to a vast number of preventable medical errors each year that result in significant injuries.

A study by Healthgrades of 37 million patient records from 2000-2002 found that an average of 195,000 hospital deaths each year were the result of preventable medical errors. (A prior, smaller study by the Institute of Medicine estimated that medical errors cost 98,000 lives in 1999.). According to Healthgrades, even a 20% improvement in just the areas of failure to rescue, bed sores, postoperative sepsis and postoperative pulmonary embolism could alone save 39,000 people each year.

A 2006 study by the Institute of Medicine found that 1.5 million preventable drug-related injuries occur each year.

A 1997 study published in the American Medical News, estimated that cost of treating injuries resulting from medical error could be as high as $200 billion annually, and adversely affect the lives of tens of million of Americans. Bringing this figure forward to present day dollars would yield $520 billion, and this figure does not take into account lost wages, lost productivity or other non-treatment costs.

So why aren’t the current oversight mechanisms working?

Boards of Medicine Are Failing At Policing The Profession

The groups primarily tasked with ensuring the quality of health care in the United States are the state medical boards. However, these boards show a wild variation in disciplinary rates, a variation one would not expect if they were maintaining a consistent level of quality.

For example, in 2001, fourteen states and the District of Columbia disciplined less than two physicians per 1000. D.C. disciplined 0.73 per 1000. At the same time, the top ten states disciplined more than five physicians per 1000, with Alaska disciplining 10.52 per 1000.

That is 14 times the rate of the District of Columbia Medical Board. So unless you believe that Alaska doctors are simply 14 times more dangerous than D.C. doctors, then it is clear that a different level of oversight is being applied in different states (there is no regional pattern to this data either).

This data raises serious questions about the extent to which medical boards are protecting patients from bad doctors. Indeed, concerns have been raised about (1) whether these boards are adequately funded and staffed, (2) whether they conduct appropriate investigations, (3) whether they are independent of state medical societies and political influence, and (4) whether the disciplinary structure is itself reasonable.

Hospital Oversight Is Even Worse

Changes in the law have allowed hospitals to escape liability for the actions of doctors by separating themselves from the doctors. Thus, more and more doctors are being made independent contractors of the hospital, with the limited oversight that entails. And while hospitals ostensibly monitor doctors when deciding whether or not to extend or revoke hospital privileges, these credentialing committees are slow to revoke privileges, because they are more concerned with legal maneuvers than doctor oversight. Indeed, there is a perception that being too aggressive about oversight will lead to litigation, either by doctors or by patients who learn that their doctor was suspended.

Medical Malpractice Fails As Quality Control

Some (mainly lawyers) argue that medical malpractice serves the function of ensuring quality control by providing doctors with an incentive to take appropriate care. Thus, they oppose anything that reduces their ability to sue doctors.

However, the Congressional Budget Office rejects this reasoning. According to the CBO, “it is not obvious that the current tort system provides effective incentives to control such injuries.”

For example, the CBO notes, health care providers generally are not exposed to the financial costs of their own malpractice, because they carry insurance. Moreover, the evidence shows malpractice claims are far too few to provide an effective deterrent. According to the CBO, of the 27,179 estimated instances of malpractice in New York in 1984, only 415 (1.5%) resulted in claims being made. Therefore, it is likely that malpractice provides little incentive for providers to exercise greater care.


Thus, effective reform must:

1. Reduce over-testing,
2. Improve compliance with the standard of care,
3. Reduce the number of preventable medical injuries, and
4. Find an effective manner to oversee the medical profession to ensure quality control.


LawHawkSF said...

Andrew: Well done, again. In its rush to solve all the wrong problems, and turn America into a workers paradise like Cuba, the administration and the Congress have once again pushed a 1300 or 1400 page bill through the House, which nobody has read and nobody understands. "Mo' gummint" is the best summary.

The medical care crisis in the country is real. And when men and women of good will begin to work on it using logic and facts, as in Andrew's columns on the subject, we can have a solution. The current political positions are "Do everything," and "Do nothing." Those are not solutions, those are political posturing.

AndrewPrice said...

Thanks Lawhawk. As you say, the politicians right now are so obsessed with either playing God and remaking the system to their liking or with making sure that nothing changes, that no one is bothering to look at what really needs to be fixed.

It's like having a car that needs a tune up and one mechanic tells you that you need a new car and the other says ignore the problem.

Now that we've outlined the problems, the next step will be to discuss ways to solve those problems.

We may not like all of the solutions, but we will reach them fairly.

Writer X said...

Andrew, not sure if you know the answer to this question but I'm curious. Are these problems found in one area of the country more than the other? Is it rural vs. city? East vs. west? Red states vs. blue states? Or is it everywhere?

AndrewPrice said...

Writer X,

In general, the problems are widespread and are NOT specific to individual regions or to rural/urban locations.

That said, the Dartmouth study found that the higher cost regions (i.e. where health care cost the most) had the biggest problems. Those regions experienced (1) a lower adherence to medical guidelines, (2) higher mortality rate following myocardial infarction, hip fracture and colorectal cancer diagnosis, (3) patients reported worse access to care and greater waiting times, and (4) patients were more likely to report poor communication by physicians.

This is counter-intuitive, but the statistical difference was more than signficant.

Why this is true is not clear.

In terms of doctor discipline, there was no geographic or economic pattern. In fact, having dealt with more than one state board, I can tell you that they are largely political.

Writer X said...

Interesting. I wonder if in regions where people pay more money for healthcare if they feel entitled to more healthcare and then that translates into more opportunities for infractions. Anyway, you're right: it's counter-intuitive. More money thrown at healthcare doesn't mean better healthcare.


AndrewPrice said...

Writer X,

The Dartmouth study made the very conclusion that more money did not result in "better" care, it just resulted in "more" care.

Unfortunately, I could find no explanation for why more money would result in worse care, but it could be any number of factors.

This is pure speculation, but possibly there is an adverse selection problem, where people who need greater care (and thus cause more costs) flock to certain locations? And maybe, they are more difficult to treat properly? I don't know, but that is just a guess.

In any event, clear national standards of care are believed to be the cure for this problem.

patti said...

andrew: "The Dartmouth study made the very conclusion that more money did not result in "better" care, it just resulted in "more" care."

that's EXACTLY how i felt with our recent incident. once they discovered we had insurance, we got more, but i didn't feel it was better.

AndrewPrice said...

Patti, that's what the studies seem to indicate, that too often you get what you can afford rather than what you need.

Michael Kriskey said...

"The Dartmouth study made the very conclusion that more money did not result in "better" care, it just resulted in "more" care."

Isn't it also the case that "more" care is necessarily "costlier" care? (Greater demand leading to higher prices.)

Does the perception that greater oversight by hospital administrators leads to lawsuits have a basis in reality? If so, is that factored into the cost of defensive medicine?

AndrewPrice said...


Part 1:

What they have found is that where more care was available, it was given, even though it wasn't medically beneficial. So in that sense, more care does always mean more expensive because it could have been avoided entirely.

On the question of whether or not greater demand will always lead to higher costs, ecomomics tell us that this is generally true -- though if the market is efficient, suppliers will increase the supply to meet that demand, and the price should fall again.

Unfortunately, our system doesn't do that right now because the buyers and sellers of healthcare don't deal directly with each other -- they let a third party payer set the price and make many of the decisions. Thus, the laws of supply and demand are frustrated by interference.

That is the heart of what is wrong with our system, and will be a big part of our solution.

AndrewPrice said...


Part 2:

The perception about greater oversight leading to more lawsuits has two aspects -- patient suits and doctor suits.

Let's start with patient suits.

In my experience, avoiding getting sued has become a huge motivators for hospitals -- second only to getting more money for Medicaid/Medicare.

To that end, hospitals have very successfully lobbied to change the laws to allow them to avoid being pulled into suits against doctors.

To get that protection, however, hospitals need to separate themselves from the doctors. That means, doctors cannot be employees and cannot be supervised by hospital personnel -- otherwise the hospitals are right back in the mix.

Thus, hospitals have been turning doctors into independent contractors and have been washing their hands of oversight.

To give you a sense of how bad this can be, here is a quote from a recent court case: "incredibly, the hospital would have us believe that doctors are nothing more than trespassers who have stumbled upon their facilities."

(And let me tell you, if a doctor is sued, the hospital will throw them under the bus faster than you can blink.)

Credentialing is one of the few ways in which hospitals still oversee doctor conduct. BUT. . .

Many states now make the actions of the credentialing committees inadmissible in patient suits -- meaning they can't be used by patients. Indeed, in many states, patients can't even get the information even if they have sued the doctor.

Thus, you would think hospitals would be freer to act against bad doctors.

BUT, there is a flip side. Doctors can sue hospitals for wrongfully taking their privileges. Thus, hospitals now are more concerned with being sued by doctors than they are with being sued by patients.

Therefore, the safest course of conduct for the hospital is to let bad doctors practice until it really becomes untenable.

Regarding costs, this would not lead to defensive medicine. To the contrary, it would lead to intentionally-blind medicine. Thus, this does not increase hospital costs.

(Footnote: There are always exceptions. Some doctors are employees of hospitals and state laws do vary. But what I said above is the fact in most states and is becoming the fact in the rest.)

Individualist said...


Your legal insight is so amazing that one could mistake you for a lawyer. But then again a "lawyer" arguing against tort reform??? Now that takes some intellectual bravery there. Don't worry I won't tell the bar association if you don't.

There is one item that I think that is lost in this debate. Forgive me but my nom de guerre requires me to mention it, "The Individual". In the past when insurance was paid for by the person needing the insurance and the doctor was paid by the patient we did not seem to have a health care crisis. So much of this is due to the government hydra with its tendrils everywhere that we seem to all miss that very point.

I think everything you have stated would very well be mitigated by this one thing. And everything you stated is spot on.

AndrewPrice said...

Individualist, thanks for not telling the bar!! LOL!

Actually, I've never been one to shade the truth to help one side or the other. I am a firm believer that the truth is the truth.

On your point about the individual, I think you are absolutely right and that is precisely where we will head with our proposal.

We will outline several reforms, but the primary reform must put the decisions for what treatment is to be provided back into the hands of the patients (buyers) and the doctors (sellers).

I think it is no coincidence that the two areas in our country where we have the biggest problems (health care and k-12 education) are the two areas where the buyers and sellers don't set the prices or make the decisions.

(We'll deal with education reform many moons from now.)

USS Ben USN (Ret) said...

Another excellent post, Andrew!

This post by Thomas Sowell segues in nicely with your series thus far:

Alice in Medical Care

AndrewPrice said...

Thanks USS Benn, I'm glad you enjoyed it. Thanks for the link as well, good article. Sowell is one of my favorite thinkers.

Mike Kriskey said...


Have you seen this graph?

AndrewPrice said...

Mike, THANKS! I had not seen that, but that is exactly where we are headed in our proposed reforms. Stossel is absolutely right, the main problem is that buyers and sellers no longer deal with each other. Yet both the Democrats AND the Republicans keep proposing further and further expansions of insurance, when they should be proposing the opposite.

AndrewPrice said...

By the way, Mike, did I answer your questions?

Mike Kriskey said...

If you looked at the comments on Stossel's post, you'll see plenty along the lines of, "So the way Stossel wants to bring costs down is to keep people from seeing doctors?" Some people take it as a mark of distinction to act obtuse.

You did answer my questions, though. (If you hadn't, I would have hollered!) I'm willing now to believe that tort reform is not a complete solution to the cost of health care. But I'm still in favor of it.

Why does being convinced of something by an attorney make me wonder if I'm a dope?

AndrewPrice said...


That will be the part that is hardest to sell, but I have a solution -- you'll see, and hopefully you'll agree it's a good one.

You can trust this attorney! :-)

Seriously, I have no dog in this fight. I've been on both sides of med mal cases and I've dealt with medical boards behalf of doctors. I have a lot of first hand knowledge, and I don't benefit one way or the other -- in fact, I'm actually done with med mal work. Too much of a pain. You basically have to go to med school just to handle the cases.

But even more so, I am trying to use only reputable figures and where possible, I am using the worst case type figures -- for example, I would not use figures from a lawyers group to try to prove that med mal is not a problem. I would instead look for figures from a doctors group or a something like that.

And don't get me wrong, I WILL propose significant med mal reform, but I just want people to understand that even if we banned all med mal lawsuits entirely, we wouldn't fix 90%+ of the problems with the system.

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