How health-care inefficiencies are tanking the economy

The health-care system's maddening inefficiencies -- high per-capita spending with poorer overall health outcomes; tens of millions uninsured and tens of millions more underinsured; insane-making battles with insurers to get reimbursements you're entitled too -- are reason enough to spur reform.

But "The Big Fix," David Leonhardt's marvelous-but-long piece on the fiscal crisis in last week's Times Magazine, argues that these inefficiencies are a) a prime example of a vested elite's ability to manipulate the economy for its own good and b) one of the most serious obstacles to the nation's long-term financial health because they are a huge drag on the economy.

The costs of health care are now so large that it has become one problem that cannot be solved by growth alone. It's qualitatively different from the other budget problems facing the government, like the Wall Street bailout, the stimulus, the war in Iraq or Social Security.


During the campaign, Obama talked about the need to control medical costs and mentioned a few ideas for doing so, but he rarely lingered on the topic. He spent more time talking about expanding health-insurance coverage, which would raise the government's bill. After the election, however, when time came to name a budget director, Obama sent a different message. He appointed Peter Orszag, who over the last two years has become one of the country's leading experts on the looming budget mess that is health care.

Orszag is a tall, 40-year-old Massachusetts native, made taller by his preference for cowboy boots, who has ... [believes] that [health care reform is] far more important to the future of the budget than any other issue in front of Congress. He nearly doubled the number of health care analysts in the office, to 50. Obama highlighted this work when he announced Orszag's appointment in November.

In Orszag's final months on Capitol Hill, he specifically argued that health care reform should not wait until the financial system has been fixed. "One of the blessings in the current environment is that we have significant capacity to expand and sell Treasury debt," he told me recently. "If we didn't have that, and if the financial markets didn't have confidence that we would repay that debt, we would be in even more dire straits than we are." Absent a health care overhaul, the federal government's lenders around the world may eventually grow nervous about its ability to repay its debts. That, in turn, will cause them to demand higher interest rates to cover their risk when lending to the United States. Facing higher interest rates, the government won't be able to afford the kind of loans needed to respond to a future crisis, be it financial or military. The higher rates will also depress economic growth, aggravating every other problem.

But this doesn't mean a complete overhaul, says Orszag; it means making the whole country like the country's most efficient areas:

[At his presentations, Orszag] would put a map of the United States on the screen behind him, showing Medicare spending by region. The higher-spending regions were shaded darker than the lower-spending regions. Orszag would then explain that the variation cannot be explained by the health of the local population or the quality of care it receives. Darker areas didn't necessarily have sicker residents than lighter areas, nor did those residents necessarily receive better care. So, Orszag suggested, the goal of reform doesn't need to be remaking the American health care system in the image of, say, the Dutch system. The goal seems more attainable than that. It is remaking the system of a high-spending place, like southern New Jersey or Texas, in the image of a low-spending place, like Minnesota, New Mexico or Virginia.

To do this, of course, we'd need data; and that would require electronic patient records. It's the best argument I've heard yet for having such records.

It's a great piece, well worth reading in its entirety. Or if you want just the health-care section, go to section V.

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We would need records to have Availability and Integrity (not to mention, accuracy) in order to solve the problem; electronic records merely the easiest and most obvious approach. The difficulty is the problem of Confidentiality.

Basic rule of design: look at the problem from first principles. (In this case, "C/I/A".)

I work in the health care medical records field. It. Is. A. bleeping Mess. Every institution has had decades to develop their own systems for keeping their records the way they want them kept. Each institution keeps track of different information in different ways. Each institution (of a size big enough to have their own IT department or person) has "computerized" their records (or is in the process of doing so) in their own way to do what they need done.

Sure, there have been attempts to define national or regional "standards" for medical records. There are books and books of codes to describe almost any condition or medical procedure. But typically these "standards" consist of defining the "syntax" for exchanging information. The actual content, the "semantics", what the data actually means, is left up to each institution. Layering a "standard" on top of an existing institution is just that, another layer. It doesn't change the culture of that institution, or the way they do business. Even when an institution purchases a "standard" data package, each installation is customized for each institution, because each institution has its own "unique" business rules, its own way of doing things. Why? "Because that's the way we've done for 30 years." Because that is the only possible way it could be done. "What do you mean our way isn't standard? Of course it's standard. We've been doing it for 30 years." Honest. I have heard these people say exactly these words.

And there are tens of thousands of these institutions country wide.

It keeps me employed. But my heart sinks when I think of trying to change the entire American Health Care system, one insular IT department at a time.

I love going to a doctor that is part of a networked medical records group. When I need a referral from my PCM, I always ask for one to a doctor or hospital in that group.

Now, my PCM also has electronic medical records, but they are in another group. It was nice when I was out of town and needed urgent care that I could see a doctor in that group. When I got back home, all the details of that visit were there. Saves a bit of time and saves me having to remember details (always a good thing!)

The reports and images from the local hospital group are never included in the electronic records of my PCM -- only the referrals. If I want MRI images and an electronic record of the reports in my PCMs file I have to sneaker net a CD to them. Also, x-rays, ultrasounds, and blood tests performed by my PCM have to be physically taken to any doctor I'm referred to.

Here's the relevant part of HR 676

(a) IN GENERAL.âThe Secretary shall create a standardized, confidential electronic patient record system in accordance with laws and regulations to maintain accurate patient records and to simplify the billing process, thereby reducing medical errors and bureaucracy.

(b) PATIENT OPTION.âNotwithstanding that all billing shall be preformed [sic] electronically, patients shall have the option of keeping any portion of their medical records separate from their electronic medical record.

Tell me how part b is going to work? No, wait... tell me how part a is going to work and give me an estimate of the cost.

No, don't. I already have a headache.

The idea is clearly to have standardized health-care records systems so that data can easily be aggregated and analyzed -- otherwise we can't compare outcomes etc. Many people have lamented the lack of something like that in our education system(s), for that lack makes it difficult if not impossible to tell what works and what doesn't, except on a macro scale, and to evaluate specific programs and teachers.

But that's for another post ...

The idea is clearly to have standardized health-care records systems so that data can easily be aggregated and analyzed

That's a shift in priorities, away from records centered around benefit to the patient, a subtle but not insignicant difference. Broad based statistical research involves, though necessity categorization, standardization and a significant degree of pigeon-holing. As a patient I would want my records organized around me and not convenience of government databanks.

Patient records are ideally almost the opposite of this. Now I guess both sorts of records can be run in parallel, but that seems like more wasted effort for doctors.