Refer to: Rose EK: Bringing costs under control (Special Article). West J Med 126:513-516, Jun 1977
Special Article
Bringing Costs Under Control E. KASH ROSE, MD, Napa, California
EVERY MONTH the American Way is being tested when we sit down and pay our bills. If you were to drop in at this moment of truth around America, you would hear more and more people questioning them, for they reflect the inflation that has made a nightmare of our ability to meet financial obligations. At the top of many of these piles of bills are medical bills. They, themselves, may not seem to be unduly hard to pay-after all, 90 percent of all Americans are covered to some extent by medical insurance. On the other hand they often can be very hard to pay. People may have had unusually large medical expenses, but no catastrophic insurance coverage. Even with insurance, they may find the portion that they themselves must pay is larger because the total number of medical bills today is larger. On top of this are the hidden costscosts in the form of pay that the employee does not take home, income he never sees directly because it is paid to him by his employer in the form of a group medical insurance plan, and the ever-increasing taxes for Medicare and Medi-Cal. Last year, health care costs totaled $140 billion in the United States. That is 8.6 percent of the gross national product. Less than 20 percent of the money spent for health care goes to physicians, although physicians "control" a significantly larger percentage by calling for hospital admissions, laboratory tests and prescriptions. Medicare These remarks are based on the Inaugural Address of Dr. Rose as President of the California Medical Association, presented March 7, 1977. Reprint requests to: Division of Professional and Public Relations, California Medical Association, 731 Market Street, San Francisco, CA 94103.
and Medicaid are now at the $40 billion mark. That is where the total national health expenditure was in 1965, just before those two programs were created. Between 1950 and 1976, the cost of a day in the hospital climbed five times as fast as the general inflation rate, reaching an average of $175 last year, up from $16 a day in 1950. I have seen some projections of the current trend in health care costs that are astounding. For the year 2000, some projections are for an astronomical $500 billion a year for health care in this country, and some even give figures over a trillion. It does not take much imagination to recognize that this represents a problem for us all. The way this problem is solved will determine whether patients will receive the same high quality care that they receive today, as well as whether medicine will remain a profession that any one can find satisfying to pursue in the challenging years ahead. The answer to those questions lies, I think, in the answer to a larger question. Do we Americans want more government, more taxes and more regulations? (That is the direction we have been going for some time.) Or are we ready for less government, less bureaucratic interference, and a chance, once again, to be more selfreliant? I am sure physicians would answer that last question with a resounding "Yes!" I am not so sure how patients would answer it. I think that the way out of this potential health-care cost crisis is individual effort. To help me answer the dilemma posed by the increased cost of health care, I sent a number of letters to specialty societies in California, asking THE WESTERN JOURNAL OF MEDICINE
513
BRINGING COSTS UNDER CONTROL
the question "What can we do, not only as an organization, but also as individual physicians and individual members of our specialty societies and hospital medical staffs, to diminish this escalation of medical costs?" Here are a few excerpts from the responses: Dr. John L. Benton, president of the California Society of Internal Medicine, said: "Perhaps the only way (to solve the problem) is to accept the admittedly awesome prospect of a real free enterprise system, and let it be introduced into health care on a rational, reasonable basis." He suggests doctors and hospitals be obliged to truly compete with each other as a means of reducing prices. Dr. Paul F. Wehrle, district chairman of the American Academy of Pediatrics, wrote: From the pediatric point of view, much of the cost increase appears to be related to technical advances. For example, the mortality rate of newborn infants in our institution is approximately 50 percent of the rates observed only 15 years ago. This improvement is associated with the use of intensive-care nurseries, one-on-one staffing and an amazing array of monitoring equipment. Similar changes have been seen in renal programs, cancer chemotherapy, thoracic surgery and many other areas. Perhaps the only rational approach is to attempt to identify relative contributions to the cost increases so that the public, the insurers and elected representatives can understand the problem more clearly. If the cost required for particular procedures is known and the cost of constructing and equipping hospitals is understood, then society is in a better position to make the necessary decisions and choices.
Dr. Don R. King, president of the California Society of Anesthesiologists, said: Patient expectations of superior medical care by specialists has contributed to increased costs. Life expectancy has increased, but there is a dollar cost for the training of all these specialists. An anesthesiologist rather than a nurse adrministers anesthesia. The family practitioner often quickly refers the severely ill patient to a specialist, and it is not uncommon for a patient to have a cadre of specialty doctors rather than go to a generalist first. It all adds up to increased costs of medical care. Intensive research that led to the polio vaccine, to the development of new antibiotics, to new diagnostic machines have all contributed to longevity.
Dr. J. L. Izenstark, president of the Society of Nuclear Medicine, said: "We need a new educational system to acquaint the public with the fact that not every small ache or small bump requires an X-ray, or, indeed, requires medical attention at all. Although physicians are guilty of overutilization, the biggest overutilizer is the public itself." Those are some opinions. In my opinion, the key is the individual-the individual physician and the individual patient. A good first step would be for each and every physician to know the exact
514
JUNE 1977 * 126 * 6
costsX of the specific examinations, services and referrals that he orders for his patients. By knowing these costs, he can be more cautious and more concerned about those costs. He might avoid some tests, for example. Or he might be more hesitant to admit a patient into a hospital when outpatient treatment might be given-which is a lot less expensive than a hospital room at $175 a day. To effect savings, physicians might be less enthusiastic about quickly implementing expensive new technology. They might also coordinate services better, to lessen the duplication of expensive new equipment. The medical profession should question some accepted practices. For example, industry spends millions of dollars on annual physicals, but studies show that those who receive the physicals have the same disease, disability and death rates as people who go to a physician only when they are sick. Each physician can accept the responsibility for informing his patients about health care costs. In this way the public may better understand the reasons for today's high costs-and may be more motivated to do something constructive about them. Physicians can tell people about professional liability costs, about the costs of defensive medicine and about the costs of new medical technology. They can be told how inflation has undermined the medical dollar, what overutilization of health services does to total costs and what poor health habits are doing to themselves and to their medical bills. The public should be made aware that there is a role for government in health care-but that role is not in taking over the health care system, which would adversely affect patients. Patients should know that more government regulations would mean more medical cost increases to pay for the administration and enforcement of those unneeded and unwanted regulations. The greatest costs savings, however, would be realized if people accepted the responsibility of regulating their own life-style and their own health care expenditures, instead of having the government do it for them. A study by the United States Department of Agriculture shows that improved nutrition might cut the nation's bill by a third. Physicians have testified before the government that diet may be one of the major causes of Americans' death and disability from coronary artery disease, several of the most important forms of cancer, hypertension, diabetes, obesity and other chronic diseases. Patients should know
BRINGING COSTS UNDER CONTROL
this. Carcinoma of the lung has become epidemic, creating vast medical costs. Automobiles are more lethal than wars. More Americans die in automobile accidents every year than were killed in the entire Vietnam War. Or, to give another example, when a motorcyclist is severely injured, because he fails to wear protective clothing, the resulting hospital bills are high. The public should be educated about the cost of reconstructive medicine for such accident victims. People should also be made aware of the enormous drain on the nation's total medical bill because society tolerates poor nutrition and squalid living conditions in ghetto areas throughout America. The federal Council on Wage and Price Stability's paper entitled "The Rapid Rise of Hospital Costs" concludes that the primary reason for hospital cost inflation is "that patients are now much more willing to pay for expensive care and doctors are much more willing to order it because insurance now finances a much larger share of those payments." The report declares that the increased costs of sophisticated medical equipment and the greater amount of this equipment and the skilled medical employees needed to operate it, are not in themselves the main reason hospital costs have risen sharply. Rather, the paper finds that patients' demands have created the need for more sophisticated medical equipment and for more employees to run it. Our patients should be told of the costs of this demand for more and more medical services, more hospital admissions and more tests. According to the Department of Health, Education, and Welfare the cost of dying is'approximately 20 percent of the money spent for health care. This is money spent for tests and hospital stays on patients who have no hope of recovering. It has come time to ask ourselves if we, as a society, prefer to face death in a hospital, or at home. As to overutilization of medical services, there are several alternative solutions of that problem. First, physical facilities could be limited, meaning fewer hospital beds, fewer new hospitals and less new medical equipment. By limiting what is available, total use inevitably is controlled and sometimes even reduced. Second, the use of medical services could be limited by government regulations. But this means waiting periods for elective surgical procedures and a limit on the number of operations that could be done during any given month. Third, use could be limited by requiring patients to participate in paying the actual cost of
their health care. This would mean copayments along with insurance as the rule instead of the exception. If each patient is more responsible for his medical costs, self-limitation is injected into the health cost equation. And there is a fourth alternative: for society to accept the responsibility for complete medical care and unlimited quality medical care for everyone, with the knowledge that this would be very costly no matter what system is devised. Society must then realistically be prepared to pay for this alternative, if it can. Is the public aware of these alternatives and the relative merits of each-or is it simply waiting for government to offer a seemingly simple solution, perhaps via a federal takeover of the health care system? Does the public know how much health care will cost if run by the government? Does the public understand that with total government administration of health insurance, it would also get a vast enlargement of the federal bureaucracy, plus billions more in taxes to pay for administration, in contrast to simply spending money for direct patient care? In the long run, society must decide what kind of health care America is going to have in the future. Society must decide whether it wants or can afford the volume and variety of medical wonders now available, or whether it instead is willing to accept modifications in present life-styles and a slowdown in the rate of expansion of medical technology in exchange for more moderate health care costs. There are a lot of hard decisions to make and a lot of hard questions to be answered. But before society can make these decisions, it must be informed. I would like to see an effective public information campaign on health care, its costs and the available alternatives. Education is our job and also the govenrment's job. The responsible role of the government is to tell it like it is, instead of accusing hospitals and doctors of charging too much. It should tell the people that the real causes for our health care costs are the environment and our life-styles. This information campaign merits highest priority. We need to tell people how to take better care of themselves. We need to tell people how many expensive hospital beds are being occupied by people because they smoke, drink and maim themselves and each other. We should call for a frontier spirit in a renewed concern by every American for his or her own health. THE WESTERN JOURNAL OF MEDICINE
515
BRINGING COSTS UNDER CONTROL
I would like to see, instead of a federal system of national health insurance, a program of national health information. In my opinion the most significant achievements in health care will be brought about through education, not more and more regulations. It is time for each individual person to show what he can do. It will take in-
dividual efforts to stem the rising costs of health care. It will take the individual efforts of patients, and it will take our individual efforts as physicians. If this is done, all of us, working together as concerned individual members of society, can reduce the need for health services and make health care bills in this country easier to pay.
Questions to Ask During Premarital Counseling Providing premarital counseling is an important step for physicians to be taking. It provides one of the best guarantees for a good, happy marriage and a healthy marriage, because physically healthy and happy families have a close relationship.... You can do the usual physical examinations, and have the usual discussions of whatever physiological things you want to discuss, and things of that sort. But also, please, in the midst of this, ask them about possible areas of conflict.... Ask them such key questions as: "What time do you get up in the morning . . . and who'll get up first. . . ?" And also, "Who's going to carry out the garbage? . . . If there's going to be some little difference of opinion about it, now's the time to talk about it, before you even get married." . . . Examples of problems of living together-money: "Do you plan to have a joint checking account? What do you think is a good insurance program? Do you believe in credit cards? And which one of you is going to write the checks to pay the bills at the end of the month? . . . Where are you going to spend -next Christmas? Vacations? Which one of your in-laws are you going to have the most trouble with? What kind of trouble is that in-law going to cause you? And how are you going to handle it?" Forewarned will make them forearmed, and will save an awful lot of grief. -BEVERLEY T. MEAD, MD, Omaha Extracted from Audio-Digest Obstetrics and Gynecology, Vol. 23, No. 6, in the Audio-Digest Foundation's subscription series of tape-recorded programs. For subscription information: 1577 East Chevy Chase Drive, Glendale, CA 91206.
516
JUNE 1977 * 126 * 6
Special Article
Bringing Costs Under Control E. KASH ROSE, MD, Napa, California
EVERY MONTH the American Way is being tested when we sit down and pay our bills. If you were to drop in at this moment of truth around America, you would hear more and more people questioning them, for they reflect the inflation that has made a nightmare of our ability to meet financial obligations. At the top of many of these piles of bills are medical bills. They, themselves, may not seem to be unduly hard to pay-after all, 90 percent of all Americans are covered to some extent by medical insurance. On the other hand they often can be very hard to pay. People may have had unusually large medical expenses, but no catastrophic insurance coverage. Even with insurance, they may find the portion that they themselves must pay is larger because the total number of medical bills today is larger. On top of this are the hidden costscosts in the form of pay that the employee does not take home, income he never sees directly because it is paid to him by his employer in the form of a group medical insurance plan, and the ever-increasing taxes for Medicare and Medi-Cal. Last year, health care costs totaled $140 billion in the United States. That is 8.6 percent of the gross national product. Less than 20 percent of the money spent for health care goes to physicians, although physicians "control" a significantly larger percentage by calling for hospital admissions, laboratory tests and prescriptions. Medicare These remarks are based on the Inaugural Address of Dr. Rose as President of the California Medical Association, presented March 7, 1977. Reprint requests to: Division of Professional and Public Relations, California Medical Association, 731 Market Street, San Francisco, CA 94103.
and Medicaid are now at the $40 billion mark. That is where the total national health expenditure was in 1965, just before those two programs were created. Between 1950 and 1976, the cost of a day in the hospital climbed five times as fast as the general inflation rate, reaching an average of $175 last year, up from $16 a day in 1950. I have seen some projections of the current trend in health care costs that are astounding. For the year 2000, some projections are for an astronomical $500 billion a year for health care in this country, and some even give figures over a trillion. It does not take much imagination to recognize that this represents a problem for us all. The way this problem is solved will determine whether patients will receive the same high quality care that they receive today, as well as whether medicine will remain a profession that any one can find satisfying to pursue in the challenging years ahead. The answer to those questions lies, I think, in the answer to a larger question. Do we Americans want more government, more taxes and more regulations? (That is the direction we have been going for some time.) Or are we ready for less government, less bureaucratic interference, and a chance, once again, to be more selfreliant? I am sure physicians would answer that last question with a resounding "Yes!" I am not so sure how patients would answer it. I think that the way out of this potential health-care cost crisis is individual effort. To help me answer the dilemma posed by the increased cost of health care, I sent a number of letters to specialty societies in California, asking THE WESTERN JOURNAL OF MEDICINE
513
BRINGING COSTS UNDER CONTROL
the question "What can we do, not only as an organization, but also as individual physicians and individual members of our specialty societies and hospital medical staffs, to diminish this escalation of medical costs?" Here are a few excerpts from the responses: Dr. John L. Benton, president of the California Society of Internal Medicine, said: "Perhaps the only way (to solve the problem) is to accept the admittedly awesome prospect of a real free enterprise system, and let it be introduced into health care on a rational, reasonable basis." He suggests doctors and hospitals be obliged to truly compete with each other as a means of reducing prices. Dr. Paul F. Wehrle, district chairman of the American Academy of Pediatrics, wrote: From the pediatric point of view, much of the cost increase appears to be related to technical advances. For example, the mortality rate of newborn infants in our institution is approximately 50 percent of the rates observed only 15 years ago. This improvement is associated with the use of intensive-care nurseries, one-on-one staffing and an amazing array of monitoring equipment. Similar changes have been seen in renal programs, cancer chemotherapy, thoracic surgery and many other areas. Perhaps the only rational approach is to attempt to identify relative contributions to the cost increases so that the public, the insurers and elected representatives can understand the problem more clearly. If the cost required for particular procedures is known and the cost of constructing and equipping hospitals is understood, then society is in a better position to make the necessary decisions and choices.
Dr. Don R. King, president of the California Society of Anesthesiologists, said: Patient expectations of superior medical care by specialists has contributed to increased costs. Life expectancy has increased, but there is a dollar cost for the training of all these specialists. An anesthesiologist rather than a nurse adrministers anesthesia. The family practitioner often quickly refers the severely ill patient to a specialist, and it is not uncommon for a patient to have a cadre of specialty doctors rather than go to a generalist first. It all adds up to increased costs of medical care. Intensive research that led to the polio vaccine, to the development of new antibiotics, to new diagnostic machines have all contributed to longevity.
Dr. J. L. Izenstark, president of the Society of Nuclear Medicine, said: "We need a new educational system to acquaint the public with the fact that not every small ache or small bump requires an X-ray, or, indeed, requires medical attention at all. Although physicians are guilty of overutilization, the biggest overutilizer is the public itself." Those are some opinions. In my opinion, the key is the individual-the individual physician and the individual patient. A good first step would be for each and every physician to know the exact
514
JUNE 1977 * 126 * 6
costsX of the specific examinations, services and referrals that he orders for his patients. By knowing these costs, he can be more cautious and more concerned about those costs. He might avoid some tests, for example. Or he might be more hesitant to admit a patient into a hospital when outpatient treatment might be given-which is a lot less expensive than a hospital room at $175 a day. To effect savings, physicians might be less enthusiastic about quickly implementing expensive new technology. They might also coordinate services better, to lessen the duplication of expensive new equipment. The medical profession should question some accepted practices. For example, industry spends millions of dollars on annual physicals, but studies show that those who receive the physicals have the same disease, disability and death rates as people who go to a physician only when they are sick. Each physician can accept the responsibility for informing his patients about health care costs. In this way the public may better understand the reasons for today's high costs-and may be more motivated to do something constructive about them. Physicians can tell people about professional liability costs, about the costs of defensive medicine and about the costs of new medical technology. They can be told how inflation has undermined the medical dollar, what overutilization of health services does to total costs and what poor health habits are doing to themselves and to their medical bills. The public should be made aware that there is a role for government in health care-but that role is not in taking over the health care system, which would adversely affect patients. Patients should know that more government regulations would mean more medical cost increases to pay for the administration and enforcement of those unneeded and unwanted regulations. The greatest costs savings, however, would be realized if people accepted the responsibility of regulating their own life-style and their own health care expenditures, instead of having the government do it for them. A study by the United States Department of Agriculture shows that improved nutrition might cut the nation's bill by a third. Physicians have testified before the government that diet may be one of the major causes of Americans' death and disability from coronary artery disease, several of the most important forms of cancer, hypertension, diabetes, obesity and other chronic diseases. Patients should know
BRINGING COSTS UNDER CONTROL
this. Carcinoma of the lung has become epidemic, creating vast medical costs. Automobiles are more lethal than wars. More Americans die in automobile accidents every year than were killed in the entire Vietnam War. Or, to give another example, when a motorcyclist is severely injured, because he fails to wear protective clothing, the resulting hospital bills are high. The public should be educated about the cost of reconstructive medicine for such accident victims. People should also be made aware of the enormous drain on the nation's total medical bill because society tolerates poor nutrition and squalid living conditions in ghetto areas throughout America. The federal Council on Wage and Price Stability's paper entitled "The Rapid Rise of Hospital Costs" concludes that the primary reason for hospital cost inflation is "that patients are now much more willing to pay for expensive care and doctors are much more willing to order it because insurance now finances a much larger share of those payments." The report declares that the increased costs of sophisticated medical equipment and the greater amount of this equipment and the skilled medical employees needed to operate it, are not in themselves the main reason hospital costs have risen sharply. Rather, the paper finds that patients' demands have created the need for more sophisticated medical equipment and for more employees to run it. Our patients should be told of the costs of this demand for more and more medical services, more hospital admissions and more tests. According to the Department of Health, Education, and Welfare the cost of dying is'approximately 20 percent of the money spent for health care. This is money spent for tests and hospital stays on patients who have no hope of recovering. It has come time to ask ourselves if we, as a society, prefer to face death in a hospital, or at home. As to overutilization of medical services, there are several alternative solutions of that problem. First, physical facilities could be limited, meaning fewer hospital beds, fewer new hospitals and less new medical equipment. By limiting what is available, total use inevitably is controlled and sometimes even reduced. Second, the use of medical services could be limited by government regulations. But this means waiting periods for elective surgical procedures and a limit on the number of operations that could be done during any given month. Third, use could be limited by requiring patients to participate in paying the actual cost of
their health care. This would mean copayments along with insurance as the rule instead of the exception. If each patient is more responsible for his medical costs, self-limitation is injected into the health cost equation. And there is a fourth alternative: for society to accept the responsibility for complete medical care and unlimited quality medical care for everyone, with the knowledge that this would be very costly no matter what system is devised. Society must then realistically be prepared to pay for this alternative, if it can. Is the public aware of these alternatives and the relative merits of each-or is it simply waiting for government to offer a seemingly simple solution, perhaps via a federal takeover of the health care system? Does the public know how much health care will cost if run by the government? Does the public understand that with total government administration of health insurance, it would also get a vast enlargement of the federal bureaucracy, plus billions more in taxes to pay for administration, in contrast to simply spending money for direct patient care? In the long run, society must decide what kind of health care America is going to have in the future. Society must decide whether it wants or can afford the volume and variety of medical wonders now available, or whether it instead is willing to accept modifications in present life-styles and a slowdown in the rate of expansion of medical technology in exchange for more moderate health care costs. There are a lot of hard decisions to make and a lot of hard questions to be answered. But before society can make these decisions, it must be informed. I would like to see an effective public information campaign on health care, its costs and the available alternatives. Education is our job and also the govenrment's job. The responsible role of the government is to tell it like it is, instead of accusing hospitals and doctors of charging too much. It should tell the people that the real causes for our health care costs are the environment and our life-styles. This information campaign merits highest priority. We need to tell people how to take better care of themselves. We need to tell people how many expensive hospital beds are being occupied by people because they smoke, drink and maim themselves and each other. We should call for a frontier spirit in a renewed concern by every American for his or her own health. THE WESTERN JOURNAL OF MEDICINE
515
BRINGING COSTS UNDER CONTROL
I would like to see, instead of a federal system of national health insurance, a program of national health information. In my opinion the most significant achievements in health care will be brought about through education, not more and more regulations. It is time for each individual person to show what he can do. It will take in-
dividual efforts to stem the rising costs of health care. It will take the individual efforts of patients, and it will take our individual efforts as physicians. If this is done, all of us, working together as concerned individual members of society, can reduce the need for health services and make health care bills in this country easier to pay.
Questions to Ask During Premarital Counseling Providing premarital counseling is an important step for physicians to be taking. It provides one of the best guarantees for a good, happy marriage and a healthy marriage, because physically healthy and happy families have a close relationship.... You can do the usual physical examinations, and have the usual discussions of whatever physiological things you want to discuss, and things of that sort. But also, please, in the midst of this, ask them about possible areas of conflict.... Ask them such key questions as: "What time do you get up in the morning . . . and who'll get up first. . . ?" And also, "Who's going to carry out the garbage? . . . If there's going to be some little difference of opinion about it, now's the time to talk about it, before you even get married." . . . Examples of problems of living together-money: "Do you plan to have a joint checking account? What do you think is a good insurance program? Do you believe in credit cards? And which one of you is going to write the checks to pay the bills at the end of the month? . . . Where are you going to spend -next Christmas? Vacations? Which one of your in-laws are you going to have the most trouble with? What kind of trouble is that in-law going to cause you? And how are you going to handle it?" Forewarned will make them forearmed, and will save an awful lot of grief. -BEVERLEY T. MEAD, MD, Omaha Extracted from Audio-Digest Obstetrics and Gynecology, Vol. 23, No. 6, in the Audio-Digest Foundation's subscription series of tape-recorded programs. For subscription information: 1577 East Chevy Chase Drive, Glendale, CA 91206.
516
JUNE 1977 * 126 * 6
