Article 91. Reprint Innovations in Healthcare

Reprint: Innovations in Health Care January 2012 by Lawrence Rosier

How to Have Effective Health Care Reform
Just when we thought that healthcare in America couldn’t get worse we get  Obamacare the worst solution for providing healthcare that has ever been put forward. The problem is that their approach is dead wrong they used the same old political approach that nearly always comes up with a bad solution. They take a failing healthcare system fraught with waste largely from corruption and they expand it compounding the the waste and corruption trying to get healthcare to more people. They get together the biggest stakeholders, special interest groups, and they reach a compromise that they can live with then they pass the costs of health care to the public and make everyone pay.

The approach I recommend is to always fix the systems first and health care is a
delivery system. The key to this approach is to form an Elite Team of the best professionals with the most knowledge of our health care system without connections to special interests. Then have them go through the current health care delivery system reviewing the healthcare delivery process.  They will separate the value added (needed processes) from the non-value added processes. This exercise is applied to the high level aspects of the healthcare system without getting bogged down in the details. This analysis should also compare European healthcare systems with our own they currently deliver health care more efficiently than we do.

The next step is to take a fresh look at the thousands of suggestions for fixing our health care systems. Once we have an efficient solution then, and only then, do we bring in the principal stake holders the special interests to hammer-out a final solution.

One of the major problems is how do we deliver to the individual the healthcare each of us needs. A problem occurs if the states define their own healthcare rules then insurance companies cannot operate efficiently with fifty different sets of rules. The following article offers a solution to this problem.

From: “How to Have Effective Health Care Reform” By John Huntinghouse
Ref. 2. John Huntnghouse’s website: http://www.huntinghouseblog.com
The steps needed in order to have effective health care reform using a free market approach to the topic.

Step 1.
Realize that our current system is not a free market system. We need to start off this discussion by making the point that our current system has many public policies that prevent markets from working. Such policies can be found in ill conceived federal tax policies, insurance regulation, and barriers to entry specifically have shielded the consumers from costs and greatly inhibited competition.

Step 2.
Increasing the choices we as individuals have for our own health care. Many people state that our current system gives us choice and the freedom to pick our providers but if you closely look at it, this is not the case. Look at who you get your medical insurance through. Did you pick your insurer and medical plans?
If you are employed by a company, there’s a good chance that you only had one choice of medical insurance provider and that provider may have had at max, 3-4 options on medical insurance. This lack of competition between individual consumers stifles true competition that in a natural market would bring healthcare costs down.

Step 3.
Increase co-payments and deductibles. Some will say “why would you want to increase deductibles and co-payments?” The reason why you would do this is to give consumers more “skin in the game,” by making them aware of the cost of health care and the differences between insurers and health providers.
Right now because of a low deductible you would go into any physician’s office and let them run as many tests as the doctor seems fit to do. You have no idea of the cost of the each test let a lone the cost between physicians because you pay the same co-payment regardless of where you go. Plus with such low deductibles you could care less how much extra it cost for certain tests or the difference in price between physicians because the insurance will pick up regardless. This costs the insurer more money and thus it will ultimately increase the monthly premiums and further raise the deductible in the long run.

Based on the RAND Corporation’s National Health Insurance Experiment, “if the average annual health-plan deductible were to rise from its current level of $250 to even $500 and the typical coinsurance rate were to rise from 20% to 25%, we estimate that annual health-care spending would decline by $65 billion per year.

Step 4.
Remove individual state restrictions. Even with the tax field leveled the consumers would run into the problem with the insurance markets within specific states. Obviously each state is different with their differing regulations and mandates but there are approximately 1,500 specific insurance coverage
requirement that are imposed by the various state legislatures. Some of these requirements and mandates are beneficial but not to all. Such is the case with chiropractic care and alternative medicine. These are options that should be chosen by the individual consumer and because it is not, the cost must be covered by all who are part of the plan.  Insurance providers need to be allowed to go nationwide and not be so encumbered by every individual state regulations and mandates. By allowing insurance companies to go nation wide, one of the benefits is that the insurance you have would become portable. You would be able to leave one job in one state to go to another job in another state and yet still keep your insurance coverage. By removing many of the state mandates and any-willing-provider laws, the average cost savings would be around 7 – 17%. That would be around $600-$1500 a year for the average family that they could be saving each year.

Step 5.
Lower the barrier of entry. To avoid what has happened to the law industry, the medical industry and government have restricted the supply of health professionals who enter medical school or other types of higher education learning for the industry. Thousands of candidates perfectly qualified to enter medical school are not allowed in due to the fact that there are these strict regulations in place to prevent the over saturation of health professionals in the field. This is another example of basic supply and demand principle that affects many of us to timely health care. Many of the family practice physicians are no longer taking new patients because they are completely booked. Those advocates will tout the fact that they are doing quality and cost control. However, this effectively results in market participants (the doctors and hospital in charge of medical schools and residency programs) acting in cooperation with each other to
restrict competition, which is a violation of antitrust laws. The Supreme Court has previously ruled that ensuring quality is no defense against such practices. To fix this problem, no new legislation would need to be passed, the government would only need to enforce the laws are that are already on the books. There needs to be a better balance between the strictness of the standards of medical school (not quality of physicians) and the benefits of greater competition. On top of this, there are many states that have laws that restrict nurse practitioners and other qualified health providers from providing needed care that they are perfectly qualified to do. The massive shortage of health providers in rural and underrepresented areas
could be filled with such personnel.

John Huntinghouse seams to indicate that public heath care insurance should be organized more like car insurance. The selection of a car insurance provider is entirely by customer choice and is valid in any state in the union. Assuming this is the case then employers should supply a block grant of money for health care
insurance for each employee allowing them to find the health care provider that best fits their needs.  The primary reason for health care insurance should be for catastrophic injury and illness and not to cover all health care costs. This allows the insured to be protected from unforeseen massive health care expenditures while having affordable insurance rates.

The author indicates that a range of copayments be charged for different medical services and tests and that the copayments should be significant enough to make the policy holder think about the cost of the service and its value to him. He also suggests that the number of graduating doctors is artificially held to a
predetermined number and should be allowed to expand to allow all graduates that are qualified to become doctors.

This article assumes that private insurance is the answer to our health care problems. An alternative is the government run health care programs found in Europe which we dismiss as socialism. We have the highest health care costs among the leading nations of the world. England, France and Italy all have complete health care for all of its citizens. They are taxed pretty heavily for this and only a few have private health insurance (mostly the rich). We call this socialism because the government provides the entire health system the hospitals and health insurance and not private companies. These European systems require virtually no paperwork since all citizens are eligible. Contrast that with the mountain of paperwork we do in the US just to determine if we are eligible. The primary benefit besides to the citizens is that companies and small businesses don’t have to provide health care insurance. Many Europeans before visiting the US ask themselves the question “What do I do if I get sick?” That’s the same question many of us in US are asking.

Making Lean Teams Work in State Health Care by Lawrence Rosier
The answer is to reform government and make it operate like a private business. If this is done properly no private business can compete.  No one in the past believed that a government organization could be made so efficient and effective that a private company could not make a profit and therefore not be able to compete. The following approach using Enterprise Lean makes competition with a private company unprofitable.

Enterprise Lean is a concept developed and implemented in industry by Toyota can be applied directly to a state healthcare organization. The entire healthcare organization’s Lean approach is to inspire healthcare workers and the public to participate in bringing a renewed interest in health and senior services by focusing on raising the level of quality and public awareness of health practices.

One of the first efforts of a healthcare organization is to develop an all inclusive Mission Statement. Mission statements are not easy to develop but the difficulty can be somewhat eased by developing a proposed list of accomplishments which the organization thinks it can achieve. Then try to boil these down into a single goal statement which includes all stake holders as well as the general public. Remember that volunteer workers can be a significant asset to the state. This is where the “role of state healthcare” is defined a necessary step given the limitation of state resources. Many states have differing roles especially in the area of Medicare Management.

This was the “inspiring” portion of the approach the next step is in bringing innovation in health care through Lean Teams which I would rename to something more relevant such as: Health Quality Teams (HQT). A facilitator trains and guides each HQT as it elects its own leader. The goal is to “empower” healthcare workers in each function to develop ways of improving the healthcare processes and raise the level of healthcare quality in their function.

The team should review the current processes used by the function. The best way to do this is to create a Processes Flow Chart on long sheets of wrapping paper or butcher paper taped to the conference room walls. The long sheets can be taken down and rolled at the end of each meeting. Each process is created on
8 ½ x 11 sheets and taped to the wall allowing changes and corrections to be made to the wall as the method proceeds. After discussions an improvements to the process are agreed upon by the team a second improved process flow is added to the wall chart showing the improved method. The reason for doing this is to show the costs and the time to perform each of the processes in the improved method. In the interests of improving quality the time to perform the new processes may actually be longer than the old method. If some way of getting the improved quality can not be found while reducing costs the method is still
presented to top healthcare management for approval as the improved processes to be used by the function. If approved the method is documented and given to a Budget Analyst for costing-out the processes.

Note: that there is a closer relationship developing between healthcare management and the HQT functional teams. The empowerment of HQTs inspires them do more innovation and to continuously improve the function’s processes. The second phase of government reform begins by making the HQT leaders the leaders of Functional Management teams. Top management becomes the Steering Management Team. The lower level managers at this point become redundant however some may be required as part of the Steering Management Team.

Steering Management has the role of guiding and steering the organization while
Functional Management deals with the day to day operation of the functions. Steering Management is responsible for telling Functional Management “what to do” but not “how to do it”. This is a loose-tight organization with Steering firmly in control of the budget leaving Functional Management free to determine how best to do the job. Those in industry will recognize this as straight from the book “In Search of Excellence- Lessons from America’s Best-Run Companies” by Thomas J. Peters and Robert H. Waterman Jr., Harper and Row, Iowa, 1982.

The goal is to reduce bureaucracy by removing layers of management while putting more functional employees to work thus improving health services. The overall difficulty is in finding the best balance of choices for what should be done with what can be done with limited resources.


Innovation in Health Care Nurses Become Doctors (new in 2012)
There are lots of new innovations occurring every day in health care but the acceptance and implementation sometimes takes years. Most of the time acceptance of new ways of doing things is hindered by lack of funding but human habit and established procedures also contribute and are difficult to overcome.
One of the major problems in healthcare is the lack of doctors especially in small towns. The lure of high incomes and the big cities has left many small towns without doctors. Years ago doctors would diagnose patients using his best educated guess and proscribed treatment for what he thought would cure the patient.  The patients never questioned the opinion of the doctor and whether they lived or died there was nothing else that could be done. A second given was that doctors in the past were always men and nurses were always women. When I was a boy that is how you knew which was the doctor and which was the nurse.
This aura and stigma about what a doctor is still exists with us today. But times have changed doctors have many ways of testing to determine a correct diagnosis. Medical advice and prescription drug definitions are available to everyone on the Internet. Nurses today are many times more knowledgeable than doctors were when I was a boy.  The bottom line is to let experienced Nurses by taking a special state board examination become General Practitioner Doctors. I can hear the bloody scream from the American Medical Association (AMA) already.  If in fact you had to wait for the approval of the AMA it would never happen in our lifetime. They have the duty to protect the medical profession but this also means protecting the income of doctors. If the AMA will not approve this change then it must be done by fiat. Get the approval of the nursing profession and just do it. The need is too great to wait for AMA approval.

There is another related problem there is also a shortage of nurses. But when you put these two problems together a shortage of doctors and a shortage nurses the solution isn’t obvious and here is why. There is high dropout rate for trained nurses over the years they burnout from shift work and in just a few years they
reach the top of their pay grade. In short though highly trained there is nowhere to go in the nursing profession. If nurses especially supervision nurses with at least ten years of experience could take a board examination and become a doctor the glass ceiling would be broken. More nurses will enter the profession and stay in the profession longer if there is the possibility of becoming a doctor. You can also make the condition that nurses who become doctors must practice in a small town for five years before final approval and permanent status as a doctor.

Poka-Yoke in Health Care
Poka-Yoke, a Japanese term, one of the Lean tools that has recently become very important to the health care industry because it focuses on making systems error proof. Drug to patient delivery systems are very important because of life threatening errors which can occur at any point in the process. Now we have a
system that replaces a doctor’s Rx with the drugs numbered eliminating the chance of error with the pharmacy. Poka-Yoke can be used almost anywhere but it has its greatest value in life threatening cases and where the cost of damaged materials is high.

Approach to Out of Control Health Care Costs
The nation is struggling with the high cost of healthcare and prescription drugs. We have become a second rate country in the area of healthcare. But other nations that provide free healthcare are nearly going bankrupt and will soon cut their services. The first thing to do is to look at how we got into this mess. In the
1980’s most large employers provided dental and health insurance with a co-payment. In the 1990’s they moved to HMO’s forcing physicians to get an ok with the HMO before expensive treatment could be undertaken.

The biggest mistake being made is in not finding out where the money is really going. Is it going to new facilities, new equipment, salaries (doctors, nurses, specialists), special services (sports medicine, nursing home services, etc.) or increased medicine costs. You must know where a disproportionate amount of the funds are going and the best way to this is through state auditing. Simply increasing funding clearly has not and will not solve the problem as costs explode. The crisis is real hospitals have increasingly taken to illegally adding false services and unnecessary items to patients bills.

Once we find where the funds are going we can pick those items that the state legislature can deal with and bring under control. For example doctor’s salaries driven by high liability insurance premiums. The legislature can cap proceeds from medical malpractice law suits and form a state insurance pool for doctors
to pull premium costs down.

Auditors can survey hospital room costs and salaries to determine if they are out of line with national averages. A survey of facilities funding will determine if funds are spent on giant atriums instead of hospital rooms. Do area hospitals have reciprocal agreements to share the latest technological equipment or does each try to get all the new technologies which are then under utilized?

The nation is struggling with the high cost of healthcare and prescription drugs. We have become a second rate country in the area of healthcare. But other nations that provide free healthcare are nearly going bankrupt and will soon cut their services. The first thing to do is to look at how we got into this mess. In the
1980’s most large employers provided dental and health insurance with a co-payment. In the 1990’s they moved to HMO’s forcing physicians to get an ok with the HMO before expensive treatment could be undertaken.

The biggest mistake being made is in not finding out where the money is really going. Is it going to new facilities, new equipment, salaries (doctors, nurses, specialists), special services (sports medicine,nursing home services, etc.) or increased medicine costs. Auditors can survey hospital room costs and salaries to determine if they are out of line with national averages. A survey of facilities funding will determine if funds are spent on giant atriums instead of hospital rooms. Do area hospitals have reciprocal agreements to share the latest technological equipment or does each try to get all the new technologies which are then under utilized?

We don’t need auditors to know that Medicaid costs are out of control and linked directly to the increasing costs of prescription drugs. My solution which I have stated elsewhere is to form a Federal Government lead consortium of states to negotiate directly with drug manufacturers to obtain pricing at least as low as that found in Canada. As long as the states are divided and have no negotiating power the sky seems to be the limit on prescription drug prices.