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Comment by duffpkg | Hacker News Reader

I created the open source ClearHealth/HealthCloud EMR system, have managed hundreds of medical facilities large and small and am the author of "Hacking Healthcare". There are a lot of layers to this and competing concerns. This article is misguided at best. The quote "Doctors are among the most technology-avid people in society" is hilariously off the mark. The average age of doctors in the US is 51.

Amongst many difficult problems related to this:

-Medicare/Medicaid/Federal spending is half to 2/3 of all medical spending. They are insanely bureaucratic and simultaneously penny pinching. They require lots of things that make everyones jobs harder with no obvious benefit to anyone. They dictate in many ways how software must work in medical settings.

-Doctors in most institutions are not given an adequate amount of time to accomplish all of the things that need to be accomplished to deliver quality care and also get properly paid for the interaction. This in part is financially driven but I would say it mostly occurs because there is little to no accountability for medical systems to operate well or efficiently. In many situations there are perverse incentives to operate inefficiently.

-Doctors make an absolutely shocking amount of substantive errors, 25% of interactions or more. Preventable medical error is almost certainly in the top 5 causes of deaths in the united states.

I could go on and on but cherry picking but I think I made my point that this article looks only at one perspective of one facet of disgruntled personnel involved in a single implementation.

View on HN

First of all thanks for the book, it was a formative read for me as I started out in healthcare data and programming.

Second of all, I can’t just upvote, this is so so accurate.

The thing to remember in US healthcare is there’s actually not a single entity that has an incentive to be efficient. There are some incentives scattered through the system to pay less or to not get sued, those are not the same.

To a first approximation nobody spends money in healthcare except insurers and the government. The government just says what they’ll pay, and where they can’t, they have limited negotiating ability. You’d think an insurer would care about paying less, but they actually don’t. They care about predictability. How much are costs going to rise next year? If you’re right, you make money. If you’re wrong you lose money. That’s not really an incentive to reduce costs in the absolute because the people who pay for insurance are not patients but employers.

As an employer I care about my health insurance plan’s cost. BUT I also have no clue about what one plan vs another really means or how they’re maybe gonna save me money long term. I simply don’t have the time to understand that, and I’m probably more informed than most on the subject having worked in the sector. I too care about predictability more than cost.

Crazy part of the pandemic, during a historic health crisis many medical systems were facing bankruptcy. Why? Most of the money being paid with a good profit margin into these systems is for “elective” care. This includes cancer treatment, because surgery can take place today or a week from now and it doesn’t matter that much. Contrast to a heart attack, which is non-elective. When a pandemic rolls around, all elective care gets shut down, so hospitals lose money despite being needed more than ever.

The whole system is a zombie with none of the right incentives, no clear way to even measure the right outcomes, and worse: nobody is driving the ship.

> As an employer I care about my health insurance plan’s cost. BUT I also have no clue about what one plan vs another really means or how they’re maybe gonna save me money long term. I simply don’t have the time to understand that, and I’m probably more informed than most on the subject having worked in the sector. I too care about predictability more than cost.

As an employer, my insurance brokers are able to show me very easy to compare tables listing premiums/deductibles/oop max/copays.

It’s all pretty comparable as long as you’re comparing within the same types of networks (HMO/PPO/EPO/etc), especially with metal levels.

If anything, HDHP PPO plans or Kaiser Permanente type HDHP HMO plans do have an incentive to keep costs down as they compete with each other for my business. I’ve been able to go to my health insurance website, and type in a healthcare procedure or exam and it will usually tell me the cost at various facilities. Nowhere near perfect, but a good start towards price transparency.

This all would work a lot better if everyone was forced to buy health insurance from healthcare.gov and employers were completely removed from the equation.

You’re totally right, and I love those charts. But let’s be clear about what they’re telling us: what we are buying for our employees. It provides no information about how those costs will increase or any “gotcha” features of the plan. While it provides information about a copay and percentage an employee pays and a deductible, I have no clue if plan 1 has negotiated 25% lower prices from the local hospital system vs its competitor. Likely, all the major plans have more or less the same negotiated rates with providers, but that opacity makes it even harder for anyone to drive efficiency.

Kaiser is a very interesting example actually. Because they own both sides of the business (provider AND payer) they have a big incentive to be efficient. They do pretty well! There’s a few issues: 1.) they are still part of a larger market, so they have to pay for doctors, which means they can’t be TOO far below market salaries. Many doctors are paid on both salary and based on how many and what procedures they do i.e. how much revenue they bring to the hospital. Your doctor in many cases is paid on commission. Kaiser doesn’t do this, which some docs like, but others don’t. 2.) they are regionally limited. You can’t get Kaiser in a lot of places in the US. I’m not sure why it hasn’t scaled nationally, I’d really love to know.

Oddly, I’m told by a friend who works there that Kaiser is run internally as two halves, the insurer and the provider, they then negotiate somewhat independently and keep each other accountable.

Anyway, my pet project is something like what you suggest, decoupling insurance for employment. As an employer (and by extension an employee) I pay no taxes on a health plan I buy. I pay with pre-tax $$. As an individual if I buy insurance I pay with post tax $$ unless it makes up a certain percentage of my income and that falls above some threshold and... I lost track it’s too complicated. It shouldn’t be, there should be a way to properly decouple employment and healthcare.

>But let’s be clear about what they’re telling us: what we are buying for our employees. It provides no information about how those costs will increase or any “gotcha” features of the plan.

You're definitely right about this, but in my experience, they're all the same negotiated pricing. And the insurance companies will conveniently group different doctors/healthcare facilities based on their costs into different tiers.

You can also be sure prices will keep going up, and I like to assume that I am liable for my out of pocket maximum since healthcare providers just bill willy nilly anyway, so I know I need to keep enough cash for 2 years worth of out of pocket expenses (in case something happens in Nov/Dec of one year and carries into next year). Hint: plan to have babies in April/May, so any complications all get stuffed into one plan year, and you hit out of pocket maximum sooner. Plus you avoid the new inexperienced resident doctors coming in during June.

>It shouldn’t be, there should be a way to properly decouple employment and healthcare.

It's really simple, remove the tax benefit from employers purchasing health insurance, and give it only to individuals purchasing on healthcare.gov. Ideally no one would have a tax benefit period, and everyone would be forced to go to healthcare.gov and employer plans and whatnot would be outlawed. Politically, big business will fight that though since price transparency helps people compare job offers properly and makes it easier for people to change jobs.

> Hint: plan to have babies in April/May, so any complications all get stuffed into one plan year, and you hit out of pocket maximum sooner.

As an Australian medical student I'm horrified to think that this would be a genuine "hint" that would be relevant in a first-world country.

There's lots like that in the US, and to a much lesser extent in Europe as well. In the US I had a family member whose husband kept a not-great job because its insurance paid for her cancer treatment, whereas if he'd tried to switch jobs the other insurance might not have.

Even in Germany my (private) deductible is 3000 EUR so if I thought I might need "something done" I'd try to do it early in the year: if I spend 2999 in December the counter resets on January 1st. And I'm told I have a pretty sweet deal compared to America.

In the US, the first scenario is not a problem anymore since the Affordable Care Act requires coverage of pre existing conditions.

True, but I wouldn't place any bets on the longevity of the ACA until at least, say, mid-January.

It's actually a poor hint. You want to choose to be pregnant just before you elect your coverage for the following year. Then you can buy the gold plated care with a tiny out of pocket maximum. Then you can go back to a lower quality plan until you're ready for baby #2

I hadn’t thought of that strategy! But my wife didn’t want to deal with brand new resident doctors, so avoiding the months of June onwards was important.

Also, I’m not sure if the out of pocket savings make up for the compounded investment earnings of a triple tax advantaged HSA contribution. However, it could work if both spouses get insurance from employer and they already have a kid, and the husband chooses an HDHP with HSA and puts one child under his insurance so he gets to contribute max amount to HSA, while wife chooses low deductible low out of pocket max plan and puts new baby under that.

But I wouldn’t waste my time figuring that out or doing that paperwork, it can’t be worth the different in out of pocket maximums and deductibles if you account for the headache of doing the paperwork.

>>It shouldn’t be, there should be a way to properly decouple employment and healthcare.

>It's really simple, remove the tax benefit from employers purchasing health insurance... and employer plans and whatnot would be outlawed.

How do you get from here to there without it turning into a boon for certain employers at the expense of their employees? That is, how do you ensure that the money currently paid in benefits is passed along to employees to purchase their own plans and not pocketed (partially or in total) by companies.

That will be forced to happen as people will need to purchase insurance and demand more pay.

If anything, people will have mobility to move to different jobs and the ability to actually see which job pays more or less, so employers will have to actually compete.

And half the people the US already don’t get health insurance from employers.

One way would be to allow companies to pay employee's healthcare premiums on the employee's behalf. That's almost like the current system, but still decoupled:

1. Employee buys their own plan from healthcare.gov.

2. Employee can choose to pay directly, using pre-tax dollars. Tax law is changed to that healthcare premiums are deducted from AGI for everyone who pays them.

3. Employee can choose to submit plan documentation to employer, who will pay some/all of the premium on the employee's behalf. In this case, employer gets the tax break. If only partially paid, employee pays the rest and gets to deduct that portion.

Financially, it's a wash either way. It gives the employee control over their health plan, and it changes the 'perk' status of employer-paid healthcare. It also gives time for employers to transition away from the "reduced salary + healthcare premium" model, because they'll be competing with employers who pay higher salary and no healthcare premium. Many employees will probably prefer the higher salary, because it's more flexible and feels better. That transition can occur over time without disadvantaging any employees, because the overall costs and tax implications are the same.

As an employee, I find those charts pretty much useless, because I don't really know what kind of health care I need. Not just that I can't predict the unknown future of my health, but that I don't even know what the difference will be between an HMO and a PPO if I need something other than routine medical care.

I've been fortunate to leave me with little need to deal with medical issues, and further fortunate that I don't have to optimize for price. But it means that every year I get shown a chart and tick off an entry more or less at random. Maybe on that day I'll guess that the more expensive plan would give me a better experience if I need it; maybe I'll decide that I might as well save money.

I assume that people who have to deal with health care systems have learned which kind of system fits their needs. I've been unable to figure it out from the charts. They make the prices clear enough, but the value is largely opaque.

From what you can tell, is there any real and sensible reason for having health insurance paid by employers? Is it just an artifact of the past? I honestly can't see a single benefit from this system.

It’s an accident. The TL;DR is: During WW2 wages were frozen and employers were looking for benefits they could offer to hire workers. Health care was one. https://www.nytimes.com/2017/09/05/upshot/the-real-reason-th...

And afterwards wages were pro-forma unfrozen, but income tax went up to ridiculous levels in the higher brackets like 90%.

So sneaking some tax free compensation to your employees was just as valuable.

How do proponents of “Medicare for all” propose to fix any of these issues? (Honestly, not trying to stir the pot)

Nationalised health systems work very hard on cost control. There is a lot of FUD spread about e.g. the UK's NHS but the actual numbers show that it provides an excellent healthcare service to everyone for the same amount as Medicare+Medicade+health insurance for federal and state employees (in total via these channels half the people in the US have their healthcare paid for by the US taxpayer). I.e. the NHS is nearly twice as efficient as the US system.

I guess just copy their methods?

I'd imagine the lack of billing staff at NHS hospitals probably helps keep the cost down quite a bit?

Sadly they've added a billing system for 'health tourism'. Before that they didn't ask too many questions just treated people. I guess the billing system pays for itself? Not sure.

In the US medical billers make like $8/hr, I'm not sure that's a huge cost center compared to the $400k/yr physician.

But is the ratio 1 to 1? Or are there way more medical billers than physicians?

Anyway, it's an unnecessary cost.

One of my previous employers had approximately a dozen billers for 75-or-so physicians, and the average physician salary was $500k.

Presumably the billers spend a lot of time trying to get money out of insurance companies? We don't have those either..

[We do have private healthcare provides but even they seem much cheaper than the US system]

Edit: Any time the US healthcare system is described on HN it all sounds rather bureaucratic and stressful - as if being sick wasn't bad enough already!

> When a pandemic rolls around, all elective care gets shut down, so hospitals lose money despite being needed more than ever.

Sort of off-topic, but I'm increasingly starting to believe that this kind of complexity in business models should be disallowed in general. I mean in particular the cases of selling something with a high margin in order to fund something else that's sold at or below costs. Be it related items ("razor and blades model") or unrelated (elective vs. non-elective care).

My usual reason is that it's anti-competitive and allocates incentives in the exactly wrong way, leading to ridiculous waste (that's how we get throwaway printers with expensive cartridges), but healthcare example points to another problem: stability. A critical system whose functionality is strongly subsidized by "extra offerings" is a system that fails when those extras aren't being bought for some reason.

In engineering, simplicity is desirable. So should it be in business. After all, transparent pricing is important for proper functioning of free markets, and such schemes confuse the pricing.

Very much agreed. Systems thinking should be taught from kindergarten.

The "razor and blades model" is maybe not the best example here, as it's entirely voluntary for the consumer.

The ads convinced me to buy overpriced Mach 3 blades for 20 years, but at no time was I prevented from buying a safety razor and having cheap blades and a better shave. I could even buy one from Gillette if I really wanted to.

I'm not sure I'd want regulation protecting me from being a wasteful consumer, but I do think that something as important as a hospital shouldn't be allowed to run on whatever Ponzi scheme is momentarily profitable.

Perhaps we could regulate them more like we do banks? Something about maintaining certain critical capacity, or you lose your license to facelift?

This would destroy the ability of businesses to take on fixed costs.

Or imagine a hospital that only did high margin elective care. Instead of keeping the low margin service available while it struggled financially, it just wouldn't offer any services. Winning!

Interestingly, loss/waste aversion has caused problems in US healthcare. CON laws haven't done anybody any good, save incumbent hospitals.

> Instead of keeping the low margin service available while it struggled financially, it just wouldn't offer any services.

Margins are controlled by businesses. If there was no way for anyone to do "high margin X to subsidize low margin Y", then previously below-cost prices would raise to better reflect the real costs of providing a good or service.

Then you'll find that in many cases, these "real costs" are too high for many who need it, leading many low margin services to stop being offered and many consumers turned away. Hardly a win.

Complex subsidies can broaden the market and serve the underserved, that's a win. It's classic engineering arrogance to dismiss all complexity as unnecessary or harmful, as if the economy is a passion project that should not deign to serve those who can't or won't bear the full cost of each individual product.

If there is margin on the service, it isn't really a subsidy, it's capacity utilization (building a hospital that can do 100 surgeries a year instead of a hospital that can do 45 knee surgeries a year and filling the slots with other services).

I guess you can probably re-frame your argument using some other similar measure though.

Predatory pricing is related, but it relates to a business selling something so low it drives competitors out of business.

So I suppose if that applies where you live, and you had a business selling only the low-margin type of item, and your competitor was selling below cost, then you'd have standing for action. I'm not sure if consumers ever get a say though outside of regulatory agencies like the ACCC.

NPR has done a couple series on how dollar stores (Dollar General/Dollar Tree/Family Dollar, just search "NPR dollar general" to see the content) can setup shop directly next door to a traditional grocery store and erode the traditional grocery store out of business. Reason being - dollar stores sell only the high margin items for low prices, whereas the grocery store has the expectation that they will provide all the staples people need, even the super low-margin items like lettuce. Once a grocery store loses the competition on the high margin items, they can no longer subsidize selling the low margin items and go out of business. A real (and growing) problem in many communities.

Doctors like to think they are among the most technology-avid people in society.

In fact, my experience with doctors (coming from a place where I worked closely with them specifically on IT matters) is that doctors believe that because they're good at medicine that they are good at everything, specifically making good business decisions and understanding and correctly using technology.

This is the same with lots of professions. Software developers are also like that, and this can be verified every day on this very forum.

True, I am a software developer and I am just like that! But I am trying to fight it really hard.

I like to think I've gotten over myself pretty fast and will now freely admit that I know nothing and suck at everything.

Tongue-in-cheek of course, there's no need to downplay your own abilities and knowledge. But if anything, I'm no longer feeling like I'm missing out in the rat race. I'm missing out on the whole AI / machine learning thing but that's all right because it just doesn't pique my interest.

Damn near every time a subject that isn't software that I have good personal knowledge of comes up there's I notice a few big grayed out walls of well thought out and nuanced text.

The worst cases seem to be when there's an article (seems like it's always on Medium) about some complicated multi-part technical thing going wrong, a top level comment slings blame around as if they know exactly where to sling it and uses a PopSci understanding of the subject matter to justify it. Then someone who actually knows the relevant industry says "well actually it's a little more nuanced", proceeds to explain and then gets down-voted and flagged for it. Seems like a great way to send the message that technical knowledge and experience is not welcome here if it's going to go against whatever the convenient narrative is. What it definitely doesn't do is instill trust in comments about things I am less familiar in.

Nobody wants to hear from the guy who admits he doesn't know everything. They want the opinion from the guy who is still on mount stupid and knows just enough to think he know everything about the subject.

He sounds more confident.

> doctors believe that because they're good at medicine that they are good at everything

Reminds me of hackers :P

Iurisprudentia est scientia omnium rerum, humanorum atque divinarum

jurisprudence is the science of everything, both human and divine

:-)

We are all stupid. Every single one of us. There is not a single human being on this planet that is truly "smart"

Doctors are encouraged to communicate with certainty. Breeds? Selects? For arrogance. Other professions apperciate and display uncertainty. Most scientists speak of confidence intervals.

The most pretentious people I ever met are scientists. Mathematicians, specifically.

You are being unfair. Show offs are found everywhere, and all in all docs are not particularly worse than many others such as scientists, economists, CEOs, whatever...

I don't know, I think we are all smart. Every single one of us. There are a few exceptions, but nearly all human beings on this planet are truly "smart" compared to all other known, non-human beings.

Unless this is one of those "everything's weird and 'normal' is particularly weird" arguments.

If so I agree that "everything's stupid and therefore it's especially stupid to think anything could be 'smart'"

> nearly all human beings on this planet are truly "smart" compared to all other known, non-human beings.

This is like telling someone in poverty "well you're actually in the top 1% of worldwide income, and the top 0.1% of all-time worldwide income, so things are pretty great!"

It's true, but it's a useless thing to say.

In my experience it's usually very intelligent people who manage to display moments of epic weapons-grade stupidity - usually through sheer hubris.

There are still differences between people.

Brings two things in mind:

- polymathy, don't specialize too much, it's good to walk in other fields

- listen, being able to discuss, see the situation from all parties POV, exchange well

It's indeed rare to find this, also, I tried being less stuck up and listen but you quickly get stomped on by less knowledgeable but more dominant minds, it's tiresome.

People are smart. What they don't always have is good information or the ability to know what they don't know.

I'm very weary of "people are dumb" arguments because they seem to lead to "and that's why we should dumb down our product, remove their freedom and treat them like crap" with an alarming regularity.

Not exactly related, is it that perhaps doctors are one of the major professions where there is not much of an audit or continuous review of outcomes once they are appointed?

Perhaps there needs to be some type of continuous formal evaluation system as is applied to airline pilots.

> Analyzing medical death rate data over an eight-year period, Johns Hopkins patient safety experts have calculated that more than 250,000 deaths per year are due to medical error in the U.S.

https://hub.jhu.edu/2016/05/03/medical-errors-third-leading-...

I’ve mentioned it here before but the book “Black Box Thinking” by Matthew Syed is an interesting read in this regard. It really highlights how important it is to design a system that’s focused on error reduction (like aviation) rather than focused on allocating blame (like medicine).

IIRC there’s a chapter in the book about patient safety correlating with how “friendly” the OR nurses perceive a surgeon. The implication being that if someone makes a mistake they’re more likely to fess up a nicer surgeon (who will then have the opportunity to correct the error) and more likely to cover it up or ignore if they might get chewed out for bringing it up.

> It really highlights how important it is to design a system that’s focused on error reduction (like aviation) rather than focused on allocating blame (like medicine).

How can we change this culture though? For some reason doctors attract insane lawsuits seeking hundreds of thousands of dollars in damages. People don't seem to be so litigious when they're against rich corporations with lots of lawyers at their disposal.

If this continues, the only possible result is defensive medicine since doctors will need every bit of proof and documentation in order to prove their innocence in the event of a lawsuit.

Doing things like making sure medical staff arent forced to work while sleep deprived would go a long way to avoiding errors in the first place. Policy changes that walk the walk and substantively prioritize safety over profit can help create safety culture from the top down. Having more staff available in general can also make redundancy checks more feasible.

It is my understanding that the error rates skyrocket when patients are handed off between medical staff. Longer shifts reduce the number of hand-offs and thereby reduce the number of errors overall, despite sleep deprivation being a source of errors in itself.

Considering error rates due to sleep deprivation must rise at some point and the hand off error rate is probably quite constant there may be an optimal hand off.

However that doesn't mean this is the global optimum. There are probably ways to reduce hand off errors, e.g. by introducing hand off check lists. Sleep deprivation errors on the other hand can only be reduced by reducing sleep deprivation, giving crystal meth to the doctor (probably unethical and unsustainable) and by general poka yoke style changes that will have benefits even when not sleep deprived.

So the global optimum can probably be shifted to somewhere where the doctor is not sleep deprived and the hand off is organized. Which is also more humane towards the doctor.

You could probably have overlapping shifts?

After eg 6h of work, don't accept any new patients, but finish treating the ones you already have, if possible.

Overlapping shifts could just be seen as a better hand-off. However I think the hand-off issues are probably the same that you have in any project. There's a lot of implicit knowledge. E.g. you've noticed patient X was breathing heavily, but you weren't sure if it meant something, if you see that again 10h later you might investigate, while for the other doctor if he started after 8h he might notice it for the first time, and have a similar wait and see approach.

In this case one procedural way to make this better would be to teach doctors to write up anything unusual they notice during the day, and read this list of unusual events during hand-off to the next doctor.

That's a good idea, but I was suggesting something slightly different: try to minimize the number of hand-offs by overlapping shifts and stopping the acceptance of new cases for the outgoing personnel.

> there may be an optimal hand off.

Presumably the constraint here is having an integer number of shifts per 24-hour day - 3x8 hour, 2x12 hour, 1x24 hour and so on.

Technically a day is not a hard constraint in the short term. Maybe if you do one 36h shift, however unlikely, produces fewer errors than a 12h shift with 2 hand-offs. Long term we know about adverse health effects of inconsistent sleeping patterns, so those would factor in as well.

> How can we change this culture though?

There are articles on how the early aviation had too much pilot egos and cowboy attitude, and how the aviation industry was able to change that and reduce human errors. And how medicine should learn from them, and maybe already is.

https://www.nytimes.com/2006/10/31/health/31safe.html

https://www.youtube.com/watch?v=L_oXvXtQlBA

For "urban cowboy" attitude, compare spurs in the cockpit: https://generalaviationnews.com/2020/03/18/questions-from-th...

I wonder how doable it is to make medicine more like aviation?

Medicine is for a large part trial and error (try this medicine and come and in one week to see if it helped), under high time pressure (general practitioners in the netherlands have 10 minutes to see a patient, including reading up on previous visits, and following up with hospital research results, etc).

Even if you'd try to determine learnings from every error, and put these in protocols to instruct healthcare people to avoid same mistakes next time, would they be able to effectively use this knowledge within the 10 minutes allocated?

> In many situations there are perverse incentives to operate inefficiently.

Would you mind taking the time elaborate on this? Inefficiency in the US healthcare system is something everyone talks about but concrete examples are few and far in between. I would love to get an insiders perspective on this!

The 80/20 rule in the ACA has to be one of the most perverse incentives out there. It states 80% of premiums have to go to providing care, and all admin costs and profits have to come out of the remaining 20%.

It’s obvious why this might sound like a good idea, but only slightly less obvious why it’s a terrible one. It means that the primary mechanism available to increase profits is to drive up care spending as much as possible. Because if the 80% is a bigger number, the 20% will be too.

Sounds like a 100/0 rule might be better, then.

How do you propose to pay for admin costs, then?

Hence employers need to be removed from the equation so everyone ends up on healthcare.gov and there can be a whole bunch of insurance companies competing to keep premiums down so people purchase from them, just like car insurance.

Price transparency wouldn't really do much do change this. One of the key ways that prices are jacked up so high is through unnecessary treatments:

https://www.npr.org/sections/health-shots/2018/02/01/5822161...

and especially through unnecessary (and very, very expensive) tests:

https://www.npr.org/sections/health-shots/2019/12/23/7874035...

The people who decide what treatments and tests are necessary are the doctors, so the marketing for this would have to be "buy our cheap insurance, we deny coverage to more testing and treatments than the other insurers do". Which is obviously not a winning strategy.

If you combine that with the increase in insurer owned clinics and hospitals (which unsurprisingly saw a sharp uptick around the time the ACA came into effect), then the insurance company gets to profit more twice. Once when they jack up the premiums, and a second time when those expenses show up as revenue in their other businesses.

https://www.beckershospitalreview.com/hospital-management-ad...

I'm all for giving more power to consumers, but when you have a regulation that creates such a strong incentive for raising premiums, layering more haphazard regulation on top of it isn't going to help.

This works if there are multiple insurance companies competing for business, which would require everyone to be forced to healthcare.gov so there is a simple marketplace with sufficient number of insurance customers so that bad actors have competition.

And from my experience, the best healthcare is provided by Kaiser Permanente, which offers health insurance and healthcare under one company.

Pricing in medicine is jacked up because of low supply of workers (the grunt work is undesireable and doctors take a long time to license as well as residency funding restrictions), and infinite liability and legal costs that have to be priced in. On top of that, medicine is very complex, so you have to pay two or more very highly qualified people to double and triple check things.

Also, healthcare cost increases have slowed drastically since introduction of ACA:

https://www.healthsystemtracker.org/chart-collection/u-s-spe...

> Health spending growth has slowed, and is now more on pace with economic growth

Unclear why the downvotes - the system dynamics the parent is describing are valid. Insurers win over time if total costs go up in a predictable way. (Note: Not true for self-insured companies, such which includes essentially all large employers.)

One small (but major) nuance: the 80/20 rule applies specifically to the _insurance_ business.

So what's another way to increase profits in addition to letting care spending keep creeping up? Add non-insurance lines of business to the company, i.e. vertically integrate by acquiring some of the middle men you're paying.

Insurers snatching up PBMs[1] (or in some cases, PBMs snatching up insurers) is one insidious example. For those unfamiliar, PBMs are the companies that manage your prescription benefits. Insurers negotiate a predictable rate card with the PBM for the drugs on their formulary, insulating the insurer from market and regional pricing volatility. The PBM then negotiates with all the various pharmacies on actual prices. So when you purchase a prescription:

1. You pay your share (a fixed copay for many plans) 2. If the price the PBM negotiated was more than your copay, the PBM pays the pharmacy the difference 3. The insurer then pays the PBM whatever pre-negotiated rate they have for that prescription

With the PBM deriving their revenue/profit from the spread they're able to generate in the process[2]. But when the insurer and PBM are one-in-the-same, that spread is really just an inter-company accounting transfer that ultimately rolls up to the same P&L. But it's a _magical_ inter-company transfer, as the insurer side of the books count it as a medical cost (part of the 80% spending requirement) and the PBM side of the books (that show it as revenue) aren't subject to the 80/20 requirements. And best of all, the insurers spent so many years letting cost inflation run rampant[3] that such egregious slight-of-hand easily passes the arms length test for transfer pricing[4].

[1] https://www.statnews.com/2018/06/01/mergers-health-insurers-...

[2] They also have other revenue streams, such as squeezing rebates out of drug manufacturers as well. But the simplified scenario above covers the gist of things, and illustrates the primary conflict of interest involved.

[3] As [1] mentioned with the CVS/Aetna example, PBMs can be far more profitable than insurers. CVS generated 2.5x more profit than Aetna when they merged.

[4] https://blog.freedmaxick.com/summing-it-up/got-intercompany-...

Is 80% really unusual though? I thought most health insurances pay out > 90%.

I work in a university affiliated cancer center lab, inside of the largest hospital in my area. Due to a weird contract signed many moons ago, we are very restricted in the lab tests we are allowed to run for the cancer center physicians (employed by the university). the dumbest example is this: the total/direct bilirubin ratio. Total bilirubin is one test that we run on almost every patient as part of the comprehensive metabolic panel. Direct bilirubin is less common, but we do run a fair few of them. The calculation for the ratio is simple division. But when the ratio is ordered as a standalone test, it must be sent to another lab in the hospital megacampus. But not the gigantic lab in the main building, the lab in the children's hospital. Nobody has a good explanation for why I must send this test off into the wild blue yonder instead of simply doing some arithmetic, and I'm beginning to doubt that there is one at all.

Are there significant costs with sending the test to a far away land? I know some people that work in the medical field, and they've told me about tests being thrown into the request pile most likely for the sake of revenue.

It's a deep topic but I can cherry pick three big reasons for you in no particular order.

-Most hospitals and larger primary care installations are monopolies. There is not and cannot be for practical, zoning and regulatory reasons any sort of meaningful "competition". As a result most regulation and enforcement is toothless because no one wants the resulting problems of closing, even temporarily, a facility that is the only care for tens of thousands of people.

When there are no consequences for bad behaviors things tends toward a lowest common denominator. There are many examples but MLK Harbor Hospital strikes me as a particularly horrific one. It operated as one of the worst facilities in the US, by many objective and subjective measures, for 35+ years before it was finally closed.

-Healthcare, at it's base, is a resource allocation problem. When I last calculated what it would cost to provide every american with all of the healthcare they might reasonably consume which was 2019, that number was ~92 trillion dollars a year. We actually spend ~4 trillion. How do we decide who doesn't get the thing they should get at the time they should get it? We employ a pseudo-random system and as a result it is incredibly inefficient. Without getting into the deep dive that is healthcare costs I will just point out that the US has by far the largest number of acute care, ICU and trauma center services per capita anywhere in the world. For example we have seven times the number per capita that a country we are commonly compare to does, England. This is astronomically expensive. Without ultimately capping in some way the total resource expenditure per person this will continue. Is it a worthwhile use of resources to expend hundreds of thousands of dollars to extend someones life for 2 weeks? Maybe it depends on the someone, an 85 year old? An 8 year old? It's a very difficult set of questions that mostly just gets avoided.

-Patients do not have a rational sense of value when it comes to healthcare services. The US has very low taxes compared to much of the world and when you take that into account it has relatively low healthcare insurance premiums. I'm not saying they are low to people on an individual basis but it's a complex thing. Take canada. Every canadian individual including children is paying, at a minimum, ~$600 a month for healthcare in taxes. They don't think of it that way because it is lumped in to the tax bill. Many people in the US pay much less than this.

I have a friend who was recently complaining to me about a $700 ambulance bill. They were doing this as they were holding a brand new $1,000 iphone in their hand. I sat down with them and in a "napkin" spreadsheet created a fictitious ambulance service. They walked away thinking $600 was a pretty good deal. The inefficiency is patients put off a lot of things that are small due to cost. Those things dramatically exacerbate inefficiencies. See points 1 & 2.

> Most hospitals and larger primary care installations are monopolies. There is not and cannot be for practical, zoning and regulatory reasons any sort of meaningful "competition".

This, by itself, realistically rules out any sort of "free market" healthcare system.

Why? Advocates for a free market healthcare system usually also suggest that zoning and regulation should be fixed.

See eg https://slatestarcodex.com/2017/02/09/considerations-on-cost... and look for 'certificate of need' (or certificate-of-need). Basically, other hospitals in the area get to veto new hospitals.

> Take canada. Every canadian individual including children is paying, at a minimum, ~$600 a month for healthcare in taxes.

I’d like to point out that US public health care expenditure per capita is higher than Canada’s public expenditure per capita.

https://en.m.wikipedia.org/wiki/List_of_countries_by_total_h...

> They [Canadians] don't think of it that way because it is lumped in to the tax bill. Many people in the US pay much less than this.

There’s a good chance that most Americans are paying less toward gov health expenditures than the average Canadian due to income inequality. But in aggregate, it is more per person.

American (income) taxes are not as low as people think they are, and if you consider that health insurance plans are a form of tax, then it can be higher in places like California or maybe a couple of % points less in other states with income tax.

Ex: put 130k CAD here: https://simpletax.ca/calculator vs 100k USD here: https://smartasset.com/taxes/california-tax-calculator#bG0AW...

I have one example that I think a lot of healthcare consumers deal with - ridiculous prices for the uninsured.

The history is fascinating - in order to promote more transparency in the cost of healthcare, the gov't passed a law that defines "usual, customary and reasonable (UCR)" prices. This was because insurers used to just pay the bill, no questions asked (50+ years ago). Then they realized that the price for the same procedure varied a lot. So the law said that one could only charge the "usual and customary" price.

Sounds good right? Who wouldn't want to know the typical price?

Well, a part of that law was that the UCR price was the maximum that could be charged. There was no law about charging less.

So insurers start to negotiate discounts. Some insurers would get a discount, otherwise they pay UCR. That creates a huge incentive to push UCR as high as you can, otherwise you're potentially leaving money on the table if you get a random insurer willing to pay UCR.

So fast forward a few decades and the UCR prices have undergone astronomical inflation. No insurer pays U&C any more. In fact, they might pay 20-30% of U&C. It's nowhere close to "usual, customary and reasonable".

It wouldn't be a disaster if everyone had insurance because nobody pays it. But we do have uninsured and that's the price they're quoted now. $15,000 for an MRI that an insurer would pay $1500.

As they say, the road to hell is paved with good intentions.

https://en.wikipedia.org/wiki/Usual,_customary_and_reasonabl...

The problem here seems to be that UCR prices are not correctly calculated, as the net prices that are actually paid, not label price. If UCR would be defined as the median of net prices charged in the last 24 months, inflation would halt. As for the correct way to infer net prices, it's a problem related to transfer pricing, for which good accounting practices exist, that would take into consideration exotic arrangements for paying back the discount, in stock, other contracts etc.

If UCR would be defined as the median of net prices charged in the last 24 months, inflation would halt.

They do something similar with drug prices for Medicare called Average Selling Price (ASP). That system gets gamed as well. In fact, it actually causes prices to rise.

Medicare requires hospitals to report pricing, so they have a decent sense as to what actual costs are. You could create a law saying you have to be within 20% of that price. It wouldn’t be perfect, but it might help.

Thanks for the specifics. The drug prices problem has a quite direct solution for single buyer systems: competitive tenders for generics, and QALY price ceilings for patent drugs. If a producer asks for a too high price compared to the health outcome of their drug, the total budget is reassigned among existing drugs, thus forcing all pharmaceutic companies to compete to deliver the best overall healthcare outcome for a given budget.

Too bad the politics in USA prevent this and dismiss it as "death panels", and people are led to believe the hard trade-offs in healthcare can somehow magically go away.

As an EHR developer, this is the most correct comment I've read on the internet, maybe ever.

thank you

+1 unfortunately. This isn't the place for that but... Really. This is reality.

As a former EHR dev many of our costs come from these very same systems too. Procedures auto added to people just for walking into a building. Usually I tell people to review the bill make sure all the procedures were actually done. Many are skipped. Because they are not really needed but are still billed for.

My exp is before the big conglomerates. Doctors when I did this were crazy cheap on what they would spend money on. This has sort of moved over to the cost center now and the doctors are the ones who get shorted along with everyone else.

These systems also create a sense of not knowing what is going on. They create a system to disincentive people for looking at ways to make it better. Only the bean counters and shareholders look into that. So you end up with very strange cost cutting initiatives.

Then we added mega insurance into the mix. Which has seemed to found out it is just dandy to pass the bill onto everyone while the costs go up and up. They were supposed to keep a lid on the prices. But they didn't. I do not hold out any hope for a 'medicare for all' system doing any better. The insurance companies have a good incentive to do better. The gov not so much.

I find that insane somehow the system drives itself to the ground.

I just left a govt agency clerk job. I couldn't resist making automation scripts. Due to politics I didn't talk about it. But on my last day I showed it to a tech-saavy dude saying this might help you going faster or at least give them a case to show the hierarchy things can be improved.

I wonder if this insider hack is the only way to push things around ..

> They dictate in many ways how software must work in medical settings.

Would it be possible for an EMR software vendor to ship both a "canonical" client interface that meets all the specs/requirements; and then a separate, secondary client interface, for the same backend, which isn't included in the "package" of EMR software sold to the clinic/hospital/etc., but rather is instead a "bottom-up adoption" play, with download links to it being passed around under-the-table between doctors?

If there's any potential for doctors being liable for such-and-such if they were found to not be "using" the primary client, then said secondary interface could be implemented as macro+screen-scraping software, that operates the primary client-interface underneath—much like Mint used to do before banks supported OFX export. Then just get it classified as accessibility software, like a screen reader, and let those doctors claim a need for it :)

As someone who as only barely dipped their development toes into the waters of EMR/EHR systems, medical arenas are not the place for workarounds, under the table systems, or creative re-routings.

There are two reasons for this: one, medical terminals are super, hilariously locked down. The medical systems I've worked on are ultra-hostile instances that are often centered around detecting and eradicating non-explicitly-authorized applications, even to the point of kneecapping actually-needed software.

Second and more practically, malpractice suits are vicious wars of discovery and bitter, knock-down-drag-out compliance fights. As with so many things, the legal fiction of accessibility software sounds nice but would not stand up to the scouring scrutiny of legal counsel and defendants with critical reasoning skills and powers of discussion (and deduction) above that of policy and compliance controls. I don't mean to belittle your idea at all, but much like the doctrine of Sovereign Citizens, all is well and good until you actually encounter a judge or human with reasoning skills and the ability to trivially perceive what's /actually/ going on, and then it all falls apart.

> all is well and good until you actually encounter a judge or human with reasoning skills and the ability to trivially perceive what's /actually/ going on, and then it all falls apart.

Not disagreeing at all! My suggestion was predicated on the idea that this particular medical regulation might be a "Type II" law. To explain — I feel like there are two types of law:

• Type I: law that has a logical "spirit" behind it (usually because it was drafted all-at-once by a small number of authors) where judges will interpret the law and violations against it as reasonable human beings do;

• Type II: law (usually more "regulation", but let's call it all "law" here) that is effectively the output of a continuously-iterating bureaucratic process; or law with a "spirit" that is obviously contravened by newer laws, but which still stands because no case has yet come to knock it down; or where there's no "spirit" to the law at all, just an infinite stream of under-the-table negotiated compromises, encoded as a huge book of requirements and exceptions.

Type II law includes, for examples: tariffs; statutory crimes; and created-by-fiat licensing schemes. Judges can't think like humans when deciding whether someone has violated a Type II law, because there's no human-legible rationale behind why the law exists. They have to just plug in the formula specified in the legal code, and see what happens.

I suspect that much of medical regulation is Type II law. Insofar as that's true, you could get away with a lot as long as you still adhere to the precise wording of the relevant requirements.

This particular case (EMR software) may indeed fall more under the provision of a Type I law/regulation, though.

A lot of the current situation came about because of the Hi-Tech act. This was piles of "free" government money for healthcare facilities to use software that met voluminous requirements that are ultimately vetted by off-shore contractors hired by "beltway bandit" type organizations far removed from medicine, patients, etc. The vetting costs in the neighborhood of $100k. This creates a powerful incentive for people making software to make software that is the easiest to push through the gauntlet of vetting. It also immediately ended meaningful innovation because once you have something approved you are not going to rock the boat trying new things the require another approval cycle.

Doctors are not tech-savvy, there is not doubt about that.

But the Micro$hit Window$ kludges I've seen in pretty much every doctor's office, with many instances of the doctor entering their credentials for login, and then waiting an ungodly amount of time to get in and to the medical s/w interface, is not helping either.

> The average age of doctors in the US is 51.

So windows 95 came out the year they left medical school, and had just finished residency when the internet became particular popular and broadband started being normal.

Your book is awesome. But it’s 9 years old.

Are you planning to release an updated version? Or you think most topics are still up to date.

@duffpkg will you be updating or releasing a second edition of Hacking Healthcare anytime soon?

> Preventable medical error is almost certainly in the top 5 causes of deaths in the united states.

This is untrue, a very common myth based on a questionable study out of Johns Hopkins, which included known complications of medical procedures in the classification of "medical error."

https://sciencebasedmedicine.org/are-medical-errors-really-t...

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