Consumer Power Report #475
For much of America’s history a house call from a local physician was the standard way to obtain needed health services, but as the U.S. health care system became increasingly more complex – especially the way physicians get paid – behemoth service providers formed as a way to cut costs and use resources more efficiently. After decades of experimentation, skyrocketing health care costs, and intrusive government action, the house call is returning, along with other innovative small-business models that provide convenient quality care at significantly lower costs.
Direct health care services provide health care directly to the patient with few or no other businesses involved in the process, greatly reducing costs. In a report by WBAY.com, an ABC affiliate in Green Bay, Wisconsin, reporter Andrea Hay interviews direct-care nurse practitioner Rachael Cabral-Guevara, an Appleton-based service provider who has chosen to reject what has become the traditional model for establishing health care by making house calls and providing services at reduced costs. Cabral-Guevara says she’s been able to keep costs low by avoiding working with health insurance companies, which are heavily regulated, whenever possible.
“In direct health care, you take out a lot of overhead,” said Cabral-Guevara to WBAY.com “You take out a lot of the ‘middle people’ in regards for billing insurance. I don’t bill insurance whatsoever. By taking out that portion, I’m able to reduce my costs anywhere from fifty to seventy percent cheaper than any larger system around here.”
Cabral-Guevara says she charges between $20 and $115 for basic primary care services, including providing prescriptions, treating common illnesses, and administering basic exams.
House calls are now being used to cut the cost of receiving primary care, but studies show house calls by doctors or nurses can also be used to treat very sick patients, as Laura Landro reports for The Wall Street Journal: “Across the U.S., home-based primary-care practices are sending doctors, nurses and other clinicians on regular house calls to older, infirm patients. The goal is to prevent costly hospital stays and admissions to long-term-care facilities, while improving the quality of care, especially for the sickest 5% of Medicare beneficiaries, who account for 50% of the federal program’s costs.”
Patients, especially older patients, often find themselves in need of constant, non-urgent medical care, but in-patient hospital visits often cost at baseline $1,000 per night or more. When a patient stays in a hospital, he or she must pay for access to the hospital’s vast resources, including teams of doctors, nurses, physician assistants, and readily available testing, constant 24-hour care, and meals. Many patients don’t need all of the resources for which they nevertheless pay, and house calls allow sick patients to receive the care required without needing to pay for or use up unnecessary resources.
In a 2014 study published in the Journal of the American Geriatrics Society, a home-based primary care program aimed at treating older, sicker patients in Washington, DC was found to be 17 percent less expensive than traditional hospital stays. The average savings was $8,477 per beneficiary over two years, as reported by The Wall Street Journal.
The direct-service model, both home-based services and those operating out of clinics, allows nurse practitioners and other medical practitioners without medical degrees to provide care with limited supervision from doctors. This is an important cost-saving measure because doctors are not always necessary for basic treatment, and doctors earn much more for their services than other caregivers do.
According the Medical Group Management Association (MGMA), in 2014 primary care doctors earned an average first-year guaranteed compensation of $192,554 at hospital-owned practices, and a 2013 MGMA report indicated primary care physicians earn on average $212,840 annually. Certified nurse practitioners earn about $95,000 annually, with many earning $75,000 or less. Physician assistants earn a median annual salary of $92,970, according to U.S. News & World Report.
Some have suggested the answer to reducing growing health care costs is keeping doctor’s salaries flat or reducing the payments they receive for a variety of services. Medicare and Medicaid reimbursement rates have already been reduced in an attempt by the government to get costs under control. According to a report by Merrill Matthews in Forbes, “Doctors who still accept Medicare patients could see an average reduction of 21.2 percent in Medicare reimbursement rates [in 2015], according the Department of Health and Human Services. And a new Urban Institute study claims primary care physicians who still take Medicaid patients could see an average reduction of 42.8 percent.”
This strategy is particularly harmful because U.S. doctors spend a small fortune on education prior to actually earning six-figure salaries. The average medical school graduate has $166,750 in medical school debt, but that figure is much lower than the true cost. In addition to four years of medical school, doctors are required to have four-year undergraduate degree, and many have other graduate degrees.
Additionally, the $166,000 figure is misleading, because a small but significant portion of medical school students are the children of wealthy doctors who help finance their medical education. The data give the impression most new medical school graduates have only $166,000 in debt, but the truth is most have much more than that, but the figures are balanced off by those with very little debt. It’s not uncommon for doctors who financed their medical education using student loans to pay $400,000 or more for their degrees.
By shifting to a direct-health-care model for patients who don’t need the expertise offered by certified physicians, doctors can continue earning high salaries, patients can receive the care they need, and health care costs can be kept under control. Unfortunately, the reforms mandated in the Affordable Care Act, which presidential candidate Hillary Clinton is promising to continue if she is elected, are actually leading to a greater number of hospital mergers and consolidated medical service providers.
If Obamacare is not repealed and replaced, costs will continue to rise, doctors will be forced to take pay cuts, the quality of care will fall, and patients will suffer.
— Justin Haskins
IN THIS ISSUE:
During his “60 Minutes” interview Sunday, Republican presidential front-runner appeared to come out in favor of a form of single payer health insurance for the uninsured (although he does says he’s going to “take care of everybody”) and openly called for raising taxes on the wealthy.
Donald Trump: Obamacare’s going to be repealed and replaced. Obamacare is a disaster if you look at what’s going on with premiums where they’re up 40, 50, 55 percent.
Scott Pelley: How do you fix it?
Donald Trump: There’s many different ways, by the way. Everybody’s got to be covered. This is an un-Republican thing for me to say because a lot of times they say, “No, no, the lower 25 percent that can’t afford private. But–”
Scott Pelley: Universal health care.
Donald Trump: I am going to take care of everybody. I don’t care if it costs me votes or not. Everybody’s going to be taken care of much better than they’re taken care of now.
Scott Pelley: The uninsured person is going to be taken care of. How? How?
Donald Trump: They’re going to be taken care of. I would make a deal with existing hospitals to take care of people. And, you know what, if this is probably–
Scott Pelley: Make a deal? Who pays for it?
Donald Trump: –the government’s gonna pay for it. But we’re going to save so much money on the other side. But for the most it’s going to be a private plan and people are going to be able to go out and negotiate great plans with lots of different competition with lots of competitors with great companies and they can have their doctors, they can have plans, they can have everything.
SOURCE: By John Nolte, Breitbart
Monday afternoon, presidential hopeful Hillary Clinton hosted a live Q&A session on her Facebook page. She talked about student loan debt, health care, on-campus sexual assault, and her family, among other things. …
One voter wanted to know what Clinton would do about drug company price gouging a la last week’s Turing Pharmaceuticals scandal. Her response? “Force drug manufacturers to justify their prices, make sure they add real value. Require the largest drug manufacturers to invest a minimum amount in R&D and … let’s explore using some of these new research funds to invest directly in producing generic competitors where none exists.”
SOURCE: By Valentina Zarya, Fortune
Daraprim is a drug no one ever heard of. Unless you happen to suffer from a parasitic infection called toxoplasmosis and also have a compromised immune system or suffer from AIDS. It’s been around since 1953 and due to limited demand it’s an orphan drug. Selling for about $13 per tablet, a course of therapy for three weeks is about $300, much of the cost covered by insurance. Ho hum.
Until the 32-year-old entrepreneurial CEO of Turing Pharmaceuticals bought Daraprim and promptly raised the price to $750 per tablet, a 5000 percent increase. He was immediately accused of price gouging, taking advantage of desperate and sick patients. The predictable social media excoriation was swift and vicious. Is he greedy or just a smart businessman following the laws of economics? …
That’s what companies do when they merge or acquire. They raise the price to pay for their acquisition and provide additional return on their investment. What do they do with the investment return? Hopefully inject it into research and development of new drugs. This is an expensive process.
Bringing a new drug to market costs more than $2.5 billion. And it’s a 12 year process on average with the odds of the new drug making it from the laboratory to the pharmacy shelf about 1 in 5000. For the pharma company it’s a long shot, with no financial return, only cost on the 4999 failures.
Employers are leaving a bigger chunk of the bill for care to workers who use their health insurance, and benefits experts see few signs of this trend slowing.
Most companies now offer health coverage that requires employees to pay an annual deductible before insurance kicks in, and the size of that deductible has soared in the past decade, according to a survey released Tuesday by the Kaiser Family Foundation and Health Research & Educational Trust.
The average general deductible for workers with single coverage totaled $1,077 this year, compared to only $303 in 2006.
SOURCE: Associated Press
Doctors, hospitals and insurers are bracing for possible disruptions on Oct. 1 when the U.S. health-care system switches to a massive new set of codes for describing illnesses and injuries.
Under the new system, cardiologists will have not one but 845 codes for angioplasty. Dermatologists will need to specify which of eight kinds of acne a patient has. Gastroenterologists who don’t know what’s causing a patient’s stomachache will be asked to specify where the pain is and what other symptoms are present–gas? eructation (belching)?–since there is a separate code for each.
In all, the number of diagnostic codes doctors must use to get paid is expanding from 14,000 to 70,000 in the latest version of the International Classification of Diseases, or ICD-10. A separate set of ICD-10 procedure codes for hospitals is also expanding, from 4,000 to 72,000.
SOURCE: The Wall Street Journal