2010 Potpourri XXXI

Yet more proof that the major cause behind health care cost increases is provider pricing power is found in a Bloomberg article focusing on disparate prices among providers in California.  Here is a shock–the ones with high market shares charge much higher prices.  What ever happened to economies of scale.  The providers come up with the lamest responses when questioned about their high prices.  In fact, such pricing is inexcusable.  The government was far too lax in allowing consolidation and now needs to either break up these systems or will have to use some form of all-payer fee schedule.  Its enough to make a free market advocate cry.  (Bloomberg Article)

Personalized medicine and evidence-based medicine shouldn’t conflict but they often do with the notion of pay-for-performance programs driven off of best practice guidelines.  Population-based guidelines don’t take into account individual biochemical or other differences which may make a recommendation inappropriate for some people.  A recent blood pressure medication study highlights this.  Guidelines call for putting all people with certain levels of blood pressure on medication, but the new research shows that some people’s biochemistry reacts adversely to certain medications, and their blood pressure actually goes up.  (BP Study)

Medical malpractice costs in the form of awards,  attorneys’ fees and defensive medicine, are a major factor in the increase of overall health costs.  Because of lobbying efforts from trial lawyers, the “reform” law did nothing to address this issue.  A brief from the Urban Institute examines whether the law will lower these costs.  It notes that even the demonstrations authorized by the act are too limited to show much.  Real malpractice reform would save $20 billion or more a year.  (Urban Inst. Brief)

More on malpractice comes from a study published in the Annals of Internal Medicine on the University of Michigan’s error disclosure and compensation program.  The study indicated that the policy had reduced the time to resolving claims, reduced the legal and administrative expenses associated with error resolution and had lowered liability payments.  While Michigan also has enacted tort reform, the research suggests that the University health system saw even greater than average cost reductions.  (Annals Study)

Business News Daily carried an article about a midwest company which received a significant payoff over several years from its wellness efforts.  The research, conducted by the University of Michigan’s Health Management Research Center over a nine year period, indicated that the program cost about $7.3 million and saved about $12.1 in medical costs, lost time off and workers’ compensation payouts.  (Wellness Article)

Another substantial driver of increasing health spending is new technology.  New products or procedures may increase costs both because the unit price is higher and because the pool of patients treated expands.  The New England Journal of Medicine carries a perspective examining one new technology, robot-assisted surgery, which likely adds $1.5-2.5 billion annually to our health bill.  Studies indicate that it has not improved patient outcomes over alternative surgical methods or non-surgical treatments.  Hospitals, however, continue to promote its use as a way to attract patients, who apparently need to be better informed about the value, or lack thereof, of this technology. (NEJM Perspective)

And finally, in a note that some of you may consider mildly amusing, but without offending any of our California readers or friends, UCLA researchers say that one in five Californians report a need for mental health services.  We know, we know, some of you are thinking that is about what to expect from Californians and some of you may be thinking that is too low a number.   According to the study, women were more likely than men to believe that they needed help, which likely means California men are in denial.   What the study clearly reflects is the trend toward medicalizing relatively routine human problems, which is one thing that drives up health costs.   (UCLA Study)