HEALTHPLANUSA.net QUARTERLY NEWSLETTER
Community For Affordable Health Care Vol IV, No 2, July 2005
How the $1.4 Trillion Information Technology Industry
Will Transform the $1.7 Trillion HealthCare Industry into Affordable HealthCare
In This Issue:
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Greater use of
information technology is key to reforming the NHS. The trouble is, government
IT projects tend to go wrong. From The Economist print edition,
AS CIVIL servants go, Richard Granger, who has just taken up his post as the new information-technology (IT) chief of the National Health Service, is well-paid. With an annual salary of £250,000 ($390,000), he earns more than Nigel Crisp, the chief executive of the NHS; more than Alan Milburn, the health secretary; more, even, than Tony Blair.
That gives some idea of the importance, and difficulty, of Mr Granger's new job. It is arguably the world's largest single IT project, with a proposed budget of £12 billion over the next five years (from barely £1 billion this year). But a big revamp is generally agreed to be a necessary, though not sufficient, condition for delivering improvements across the NHS as a whole. The Wanless report earlier this year concluded that spending on technology had to double at once if the NHS was to reach its targets; the NHS spends less on IT per employee than any other industry sector.
outlined earlier this year at a
It all sounds great. But the government has staked its credibility on delivering clear improvements to public services, so Mr Granger has been asked to start implementing these three programmes (sic) starting next April, after just a few months of planning, with a target of 50% coverage by December 2005. Such a tight timetable for such a large project would be cause for concern on its own, election or no. But there is a bigger, more worrying problem: large government IT projects seem to have a habit of going wrong. They are often late, over budget, or both. In some cases, they are abandoned altogether . . .
Software problems meant that the Swanwick air-traffic control centre, for example, due to open in 1996 and expected to cost £475m, was finally switched on this year, six years late and £180m over budget. It is already obsolete. Pathway, a benefit-payment card scheme involving the Post Office, the Department of Social Security and ICL, a computer-services firm, collapsed after three years, wasting £300m. The Child Support Agency's £200m system, supplied by EDS, another computer company, was supposed to launch in April. It is now expected to launch next year, a year late and £50m over budget.
In 1999, problems with the Passport Office's new computer system caused chaos for thousands of travellers (sic). It was finally launched last year, nearly three years late. The National Probation Service's case-record and management system was scrapped last year when completion was projected to be two years late and 70% over budget. Just last month, the Inland Revenue's new system for filing tax returns online suffered from technical problems. . . .
Ah, but this will be different, respond the optimists, for a number of reasons. . . .
If you’re still optimistic that a government can run a health care system without patients getting sicker and sometimes dying waiting in the queue, you should go to the full original article at http://www.economist.com/displaystory.cfm?story_id=1390034, or you might just want to wait until the December target date to read about the results.
Copyright © 2005 The Economist Newspaper and The Economist Group. All rights reserved.
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take more days off sick than any other group in the public services, the health
services regulator says today. On average, they take 16.8 sick days off a year
compared with an average of 11.3 days across seven other areas of public
service, including the police, the prison service, Civil Service and teaching.
The figures, published in a Healthcare Commission report, are based on a survey
covering 135,000 staff in 6,000 hospital wards across
"These high rates of absence among nurses are extremely worrying," Anna Walker, the chief executive of the commission, said yesterday. Whatever the reasons, nurses are far too important for us to ignore this problem. "Stress, lack of job satisfaction, the size of the workload and the physical nature of the job may all be part of the picture.
"Nurses are the backbone of the NHS and we need to do more to understand what is happening. We will be pursuing these issues with the Royal College of Nursing and through our assessment processes.". . .
The survey found that levels of patient dissatisfaction about nursing care was strongly linked to the rates at which temporary nurses from agencies and nurse banks were used by a hospital.
Dissatisfaction with nurses was highest in
"The RCN is encouraged that the Healthcare Commission recognises (sic) that nurses are the backbone of the NHS and that decision-makers can no longer ignore the pressure they are under. . . . "
To see how bureaucrats evaluate their bureaucracy, you may want to read the entire article at http://portal.telegraph.co.uk/health/main.jhtml?xml=/health/2005/06/28/nurse27.xml.
Information appearing on telegraph.co.uk is the copyright
of Telegraph Group Limited (Filed:
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fears over NHS computer records, by Celia Hall, Medical Editor (Filed:
Putting patients' records on a central NHS computer risks breaches in confidentiality, doctors said yesterday.
Patients were unaware of what was being planned and a wide
scale public debate was needed, they said at the British Medical Association
According to a survey, more than 80 per cent of the public are worried that people other than health professionals will be able to read their personal medical files under the 10-year, £6 billion IT plans for the NHS, which include the formation of a national care record. . . .
Under NHS plans, it is proposed that summary patient data would be held on one "spine", or central core. Each record would also have a "sealed envelope" of private information. A patient's record would be available to doctors anywhere in the country, with clear advantages in the event of an emergency.
Barbara Wood, the co-chairman of the BMA patient liaison group, said: "Patients recognise (sic) the value of having their health record held centrally but are concerned about who will have access to it. "They are generally happy for their doctor or another health professional to have access to their health record but they do have worries about non-clinicians having access."
Patients also wanted to be able to put information into their records themselves and have the chance to correct anything that was wrong. . . .
Dr Eleanor Scott, a GP from Barnet, north
"The Data Protection Act can be overruled by the Government when it believes an emergency has arisen. Entire spines of information could be shared between departments including the MoD, the Home Office, the Treasury and the police." . . .
The question of patients being able to opt out of the system was being discussed.
To read the entire report, please go to www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/06/30/nbma30.xml
Information appearing on telegraph.co.uk is the copyright of Telegraph Group Limited.
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Health care is not a luxury by Peter Harbage
and Walter Zelman – Special To The Bee
Published 2:15 am PDT
and Walter Zelman allege that
As costs and premiums rise at double-digit rates,
businesses, the public and the government are spending more, often for less.
Many employers are reducing the benefits they offer. Others are requiring
employees to pay a larger share of premiums or to pay deductibles as high as
$5,000. These rising costs are a major barrier to care for the average
Three recent studies highlight the extent of the crisis.
Published by the California Health Care Foundation, the first study found that
after four years of double-digit increases, average
Most economists argue that employees - not their employers
- will pay for these sharp increases, as employers pass at least some of the
increased cost to employees in the form of smaller wage increases. With wages
relatively flat in
There could be a constructive third option. The state could implement AB 1528 (by Rebecca Cohn, D-Saratoga), approved in 2003. This legislation would create a commission of 27 individuals appointed by the governor and legislative leadership to study a wide range of cost-containment strategies within both private and public programs.
Certainly, such commissions have a mixed record. They are often created to postpone action or avoid difficult choices. Often recommendations are watered down or unheeded. . . .
evidence and current trends, the affordability issue must be addressed - before
health care becomes a luxury item in
[Unfortunately, creating another bureaucracy to study the failed bureaucracy only increases the health care costs. The only way to reduce health care costs is to eliminate the medical bureaucracy.]
About the writers: Peter Harbage is health policy program director and Walter Zelman is the director of the USC California Policy Institute. To read the entire article, go to
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Lean Consumption by James P. Womack and Daniel T. Jones, Harvard Business Review, March 2005.
[To control health care costs, we have to utilize the lean business model. As long as there is no incentive to control expenditures, health care will continue to soar. Every attempt by Medicare, Medicaid, Veterans Administration, Managed Care, Preferred Provider Networks, NHS, and any fixed deductible or fixed copayment plans have not been effective. And they never will. They have been counter productive–increasing health care costs with every mandate or control. Only by putting the patient at risk for a proportion of his own costs, will the patient really assess every purchase of health care in regards to the cost-benefit analysis as applied to himself. This reduction in cost will become effective instantly when the patient’s own bank account is at risk for every unnecessary office visit, test, treatment, medication or hospitalization. As health care utilization becomes leaner, costs are brought under control, and health insurance premiums will no longer increase. Competition will decrease the insurance premiums to the lowest possible level. Health care will then become affordable. As health care becomes affordable, employees will begin asking to take their employers premium payment out as salary or wages. This will further increase the efficiency of lean health care, with every individual reducing the costs to his own lowest level. He will not be party to a group plan that allows for excessive utilization, where he is at risk for the most greedy in his work force.]
During the past 20 years, the real price of most consumer goods has fallen worldwide, the variety of goods and the range of sales channels offering them have continued to grow, and product quality has steadily improved. So why is consumption often so frustrating? It doesn't have to be--and shouldn't be--the authors say. They argue that it's time to apply lean thinking to the processes of consumption--to give consumers the full value they want from goods and services with the greatest efficiency and the least pain. Companies may think they save time and money by off-loading work to the consumer but, in fact, the opposite is true. By streamlining their systems for providing goods and services, and by making it easier for customers to buy and use those products and services, a growing number of companies are actually lowering costs while saving everyone time. In the process, these businesses are learning more about their customers, strengthening consumer loyalty, and attracting new customers who are defecting from less user-friendly competitors. The challenge lies with the retailers, service providers, manufacturers, and suppliers that are not used to looking at total cost from the standpoint of the consumer and even less accustomed to working with customers to optimize the consumption process. Lean consumption requires a fundamental shift in the way companies think about the relationship between provision and consumption and the role their customers play in these processes. It also requires consumers to change the nature of their relationships with the companies they patronize. Lean production has clearly triumphed over similar obstacles in recent years to become the dominant global manufacturing model. Lean consumption, its logical companion, can't be far behind.
To review the entire article (subscription required), go to http://harvardbusinessonline.hbsp.harvard.edu/hbrsa/en/search/saSearchResults.jhtml?Ntt=Lean+Health+Care&N=0&Ntk=hbrsa&Ntx=mode%2Bmatchallpartial&x=14&y=14.
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One of the unfortunate experiences the world of health care had to endure was the widely held notion that health is so important that it should be free. But as Peter O’Rourke has stated, there is nothing more expensive than free health care. The experiences of the past 55 years with the National Health Service (NHS) in the UK is the increasing cost, the decreasing service and quality, the waiting lines during which disease morbidity increases, with mortality close behind. The Canadian Medicare experience is far worse. Their Supreme Court has ruled that being on a waiting list is not health care. Even so, the Canadian Medical Association filed their brief in support of Canadian Medicare. The forty years of American Medicare has been a similar story. Projected costs were normally exceeded, not by 10 or 20 percent but sometimes by a hundred percent and more. When health care is free, the utilization increases, not by 10 or 20 percent as projected, but by 100 percent and sometimes by 1000 percent (See Medical Gluttony in the biweekly MedicalTuesday newsletter. It provides examples of over-utilization in the range of 1,000 to 10,000 percent that patients still do not perceive as excessive.) When health care, the second or third largest item in the household budget, can be spent liberally without any responsible behavior, costs will skyrocket just as we’ve experienced in the 40 years of Medicare and the 55 years of the NHS.
The key element of lean health care is to develop proportionate coverage. This will place every single item in the health care budget on a risk basis. Not an inordinately great risk, but one that will make the patient or consumer of health care pause and reflect on the real value of what he is asking to have covered.
For instance, a Medicaid patient came to the Emergency Department on a Saturday because of excessive wheezing she couldn’t control. I was called to the hospital to admit her since they were unable to stabilize her with the usual emergency maneuvers. She had actually experienced the onset of a respiratory infection on Tuesday, with wheezing worsening on Wednesday, progressing on Thursday, getting more severe on Friday. On Saturday, her family took her to the Emergency Room for treatment that at this late stage required hospitalization.
When asked why she didn’t come to the office on Tuesday, or Wednesday, or certainly by Thursday or even Friday, where starting the antibiotics, increasing the aerosols, and adding the prednisone would have prevented this hospitalization, she replied that it was not convenient to come in during the week.
At that time, hospitalization was about $1000 a day and she required four days to totally clear her lungs. When asked what it would have taken for her to come in on Tuesday, or Wednesday, or Thursday, using proportionate amounts, she promptly responded that if she had to pay $10 a day to be in the hospital, she would have come to the office.
This lady traded a $40 office call (at that time) for a $4000 hospital stay because she had no financial responsibility. It is interesting that for welfare patients, a one percent copay would have saved 99 percent of the costs. Put another way, $4,000 is 100 times the cost of the alternate office visit, that calculates to a 10,000 percent increase in cost because of a lack of financial responsibility. In our experience, most welfare patients would use leaner healthcare consumption with just a one percent copayment. The average non-welfare patient responded to a 10 percent copayment as the dividing line where they would markedly reduce cost.
Lean health care in these instances would only require a 10 percent copayment for hospital bills (or a one percent copayment for the poor patients) to reduce hospital costs by 90 percent (99 percent in the welfare population), because every patient relates the cost to his own circumstances which can never be known by Medicare, Medicaid, Canadian Medicare, NHS, HMO, PPO or any currently marketed health plan or medical bureaucracy.
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Letter to the
Editor: Grace-Marie Turner, President, Galen Institute (www.galen.org/default.asp): Response to
Robin Cook article in The New York Times
Dr. Robin Cook
concludes in “Decoding Health Insurance” (op-ed, May 22) that genomics should
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Regulation Corrupts by Jayant Bhandari [Posted on
of mine has recently accepted a job in
He has a university degree, and a certification in journalism. He will work 15 hours a day and he is relatively well educated, and is in a profession where people are supposed to be aware of their “rights.”
Print media is
one of the few sectors in which foreign investment is not allowed in
approach - generally advocated, and more appealing to the hearts and minds of a
lot - would call for more government control, increased surveillance, etc.
Economists would argue that government rules and minimum wage laws are the biggest cause of unemployment and poverty; and that government control takes away the individual initiative to enter into voluntary contracts, restricting the growth of a sophisticated and efficient web of contacts that provides sustainable growth, and stability.
But such a lack
of economic efficiency would result in places where the laws were effectively
What would happen if an “honest” company came into existence, which paid government regulated salaries, and kept working conditions in accordance with the rules? (Some more sensible people would call such investors stupid. They would say that we all have the right to ignore and fight against rules that infringe on our liberty.)
In an environment of high labor intensity artificially enforced by the government, it would be hara-kiri to pay your employees more than what the market could bear. If one company paid less than minimum salary everyone who wanted to stay in business would have to do the same. The businesses sold their goods for prices that were lower than what their costs with sales tax included would be——of course they didn’t pay taxes. Anyone who dreamt of paying proper taxes was a failure before he started.
In such an environment the distortions take place in a different way, and are much worse. What rules the roost is corruption and bureaucracy. It drives the decent and conscientious to the fringes of economic activity (and the best leave the country). For those who go into business, it becomes the biggest cost of operation, and a huge drag on growth. People get a corrupt mindset, and those who do not want to participate in corrupt behavior get sidelined economically.
Only crooks can do business
It is indeed
true that until the 80s the businessmen in
I have probably
never met a taxi driver (or, just to digress a bit, a politician or a
The situation of the other industries is not very different. Starting a company requires as many as 40 clearances, each requiring groveling before the bureaucrat. Mutually contradictory and not uniformly enforced regulations result in constant harassment of the entrepreneur taking his focus away from his products. No wonder Indian products and those from such countries were so shabby.
The burden of transaction costs imposed by bad regulations and the heavy-handed State
Children and adults work for less than the bare minimum required to survive. Were this a story told a century back, it would be easy to accept this as a fact of life. It is a shame to have such a situation in the present state of technological development. Unfortunately, administrative expenses associated with dealing with corruption and bad regulations——all wasteful costs, with no substance——is the burden the poor bear.
Government laws not only create distortion by interfering in the market and increasing costs, they when not enforced uniformly, marginalize those who believe in respectable conduct and who could set more humane and professional benchmarks.
Those fighting for increased government would only make the situation worse.
But shouldn’t something be done?
This is a cliché, but is so often asked despite all the explanations.
Life is tough, but the State is not the solution; it is the problem. . . .
If someone wants to make a difference in the poverty and morality of the developing countries, he would do better to fight corruption in the public office, in government rules that cannot be enforced fairly and uniformly, and in the pathetically inefficient judiciary. Freedom is the only long-run means to promote economic development and human rights.
To read the entire message, go to www.mises.org/story/1852.
Jayant Bhandari lives and works in Vancouver BC email@example.com.
You can receive the Mises Daily Article in your inbox. Go here to subscribe or unsubscribe.
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Madeleine Cosman wrote a treatise recently, Who Owns Your Body?
Cosman asks if a
physician does not own his or her own medical mind, who owns it? If a medical
patient does not own his or her body, who owns it? Who should decide whether,
or how much, money should be spent to save a patient's life? Should a patient
have the right to spend personal cash to protect the body he or she owns? These
are not irrelevant questions. Medicare patients in both the
If you’ve missed the book review on this excellent volume by yours truly, you may still review it by click on book reviews at www.aapsonline.org/jpands/jpands1002.htm. To review some of Dr Cosman’s other articles, please go to www.healthplanusa.net/MPCosman.htm.
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More Docs Going Cash-Only: www.galen.org/ccbdocs.asp?docID=787
Journal of the Triad Area (
Michael J. Harris, MD - www.northernurology.com - an active member in the American Urological Association, Association of American Physicians and Surgeons, Societe' Internationale D'Urologie, has an active cash'n carry practice in urology in Traverse City, Michigan. He has no contracts, no Medicare, no Medicaid, no HIPAA, just patient care. Dr Harris is also nationally recognized for his medical care system reform initiatives. To understand that Medical Bureaucrats and Administrators are basically Medical Illiterates telling the experts how to practice medicine, be sure to savor his article on "Administrativectomy: The Cure For Toxic Bureaucratosis" at www.northernurology.com/articles/healthcarereform/administrativectomy.html.
John and Alieta Eck, MDs, for their first-century solution to twenty-first century needs. With 46 million people in this country uninsured, we need an innovative solution apart from the place of employment and apart from the government. To read the rest of the story, go to www.zhcenter.org.
PATMOS EmergiClinic - where Robert Berry, MD, an emergency physician and internist states: "Our point-of-care payment clinic makes acute and chronic primary medical care affordable to the uninsured of our community by refusing to accept any insurance (along with the hassles and crushing overhead that inevitably come with it). Read the rest of the story at www.emergiclinic.com.
Dr Vern Cherewatenko has success in restoring private-based medical practice that has grown internationally through the SimpleCare model network. Dr Vern calls his practice PIFATOS – Pay In Full At Time Of Service, the “Cash-Based Revolution.” The patient pays in full before leaving. Because doctor charges are anywhere from 25-50 percent inflated due to administrative costs caused by the health insurance industry, you’ll be paying drastically reduced rates for your medical expenses. In conjunction with a regular catastrophic health insurance policy to cover extremely costly procedures, PIFATOS can save the average healthy adult and/or family up to $5000/year! To read the rest of the story, go to www.simplecare.com.
Association of American Physicians & Surgeons (www.AAPSonline.org),
The Voice for Private Physicians Since 1943, representing physicians in their
struggles against bureaucratic medicine, loss of medical privacy, and intrusion
by the government into the personal and confidential relationship between
patients and their physicians. Be sure
to scroll down on the left to departments and click on News of the Day. The “AAPS
News,” written by Jane Orient, MD, and archived on this site, provides
valuable information on a monthly basis. Scroll further to the official organ,
the Journal of American Physicians and Surgeons, with Larry Huntoon, MD,
PhD, a neurologist in
Join the AAPS for their 62nd Annual Meeting in
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Stay Tuned to the MedicalTuesday.Network and the HealthPlanUSA.Network and have your friends do the same.
Del Meyer, MD, CEO & Founder
Words of Wisdom
Government is the great fiction through which everybody endeavors to live at the expense of everybody else. – Frederic Bastiat, French political economist, (1801-1850) Essays on Political Economy, 1846.
This Month in History
Our Theme for This Month in History - July - Is Freedom.
July is an important month for Freedom because so many nations gained their freedom.
Please see the complete listing at www.healthplanusa.net/July04.htm.
Let Freedom Reign and Ring