Oregon Medicaid Study

The Oregon Medicaid Study came out in the May 2013 edition of the New England Journal of Medicine.  I recently listened to two podcasts talking about the results of this study.  The first one was with Aaron Frakt and the second was with Jim Manzi. Both of these discussion were with Russ Roberts who puts together a weekly podcast called EconTalk. This study will be used for many years in the healthcare debate. I’d recommend reading it, and looking at the author’s conclusions for yourself. Basically the study found that “Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase the use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.” The study has its critics and supporters. Critics will argue that the study didn’t have enough power, the sample size wasn’t large enough, or the time period wasn’t large enough. Supporters will be happy to jump on the bandwagon to proclaim that having health insurance doesn’t improve health outcomes even though people use health services more.

As I read the study, the thought I had come to my mind was that they proved health insurance has some of the same benefits of other types of insurance. It lowers financial strain! It found the following areas of financial strain were statistically significant for the control group: amount of out-of-pocket expenses, catastrophic expenditures, any medical debt, and borrowing money to pay bills or skipping payments. Isn’t this the point of insurance. I have homeowners’ insurance incase my house burns down. I have car insurance incase I have an automobile accident. We have insurance (life, homeowners, renters, car, etc) to protect against catastrophic risks. Why don’t we treat health insurance the same way, as a risk mitigating tool? Just because I have car insurance doesn’t mean my car will run better. Why should my health be better just because I have health insurance? In my opinion, one way to lower health care related costs is to use health insurance like we use other types of insurance. Imagine the expense of an oil change if we used auto insurance like we use health insurance. Blum found that only 10% of a person’s health is related to the healthcare they received. The majority comes from lifestyle. To really improve health, we have to change individual’s lifestyles.


Jim Beam

This past weekend, I toured the Jim Beam distillery with my wife.  It was an amazing experience.  Seeing the process behind the business was eye opening.  The success they have had is almost hard to fathom.  During their 200 year history, they have survived the civil war, two world wars, prohibition, and several other historic and economic events that have crippled or destroyed other companies.  Since the trip, I have been trying to think about what has made them so successful.  Here are a few thoughts to ponder.  First, they found a successful formula and have consistently made that product.  Their process from beginning to end has been updated to take advantage of technology, but their product remains consistent.  A bottle of Jim Beam 50 years ago, will taste the same as a bottle today.  Second, they have looked for ways to expand their market without diluting their brand.  I didn’t realize Knob Creek and Red Stag fell under the Jim Beam portfolio, but they have used these to expand and target other customers.  Even though, they have expanded into other products, they haven’t forgotten what has made them successful.  Bottom line, they have expanded, but not at the expense of their primary product.  Third, they are serious about quality.  They test throughout the process to ensure it meets their specifications and their customers’ expectations.  One thing I saw that surprised me was that on the bottling line they posted metrics (broken down by employee) on productivity and efficiency.  I believe that some of the same principles that have made Jim Beam successful can be applied to other industries to survive and thrive.

JAMA Forum: Poor Technology Management a Key Driver of US Health Care Spending

Great blog post by Dr. Austin Frakt on why not effectively managing medical technology is a major reason why healthcare costs in the US are increasing at a rapid pace. Technology creates an arms race among hospitals. If hospital X has the newest surgical robot, hospital Y has to get one too to remain competitive, even if these hospitals are 10 miles apart. A May NPR article talked about Washington D.C.’s local governement approving 2 photon beam treatment centers even though there is one in Baltimore, 40 miles away. These facilities are spending $180m on a treatment that may produce marginally better results than other treatments. In my opinion, we have gone past the point where every dollar spent provides a dollar of benefits. We are now getting less than a dollar of benefits for every dollar we spend. Society has equated the best healthcare with the most expensive. In Leonard Weber’s book, Business Ethics in Healthcare: Beyond Compliance, he states, “the reality of limited resources requires that healthcare providers shift from thinking that they should always try to use the best to thinking that they should try to use the least expensive that works well” (pp 26-27). This thinking is one way to bend the healthcare cost curve.


The fact that US health care spending growth has slowed in recent years is good news for Americans. But it’s like watching a slow-motion train wreck develop a bit more slowly. It’s still a train wreck.

The health care sector is consuming our nation’s wealth at a rate that is faster than we generate it. Before the recession and economic downturn, in 2007 we spent 16% of the gross domestic product on health care. Today the figure is 17.5%. Ever higher health spending is squeezing out needed infrastructure investment and contributing toward wage stagnation. Despite the slowdown, our battle with health care spending is not over.

Moreover, many proposals to wage a more effective battle miss a key point: a sustained and substantial reduction in health care spending growth must focus not just on deductible levels and integration of care. It must focus on technology.

In many other sectors…

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Experimental treatment

In a recent Army Times article, documents were unearthed that revealed the VA lobotomized over 2,000 veterans from WWII. (http://www.armytimes.com/article/20131211/NEWS/312110013/Report-VA-lobotomized-2-000-disturbed-veterans) I’m shocked this is just now coming out, but not surprised some of these treatments to alleviate PTSD were used.  Mental health is a taboo subject for most people.  We could probably all use some help every now and then, but no one wants to admit it.  We all process events differently, some need more help than others.  A person will post on social media there battles with cancer or some other hardship, but individuals will suffer in silence with depression or other mental illnesses because others may judge or criticize.

The biggest disturbance of this article is the ethical concern of autonomy.  Childress and Beauchamp define autonomy as an individual’s determination in their healthcare decisions.  This concept has its roots in the legal case of  Schloendorff v. Society of New York Hospital where they ruled, “Every human being of adult years and sound mind has a right to determine what shall be done with his own body.”  Maybe the VA made the determination that these individuals were not of sound mind? Part of the process to get this procedure done was getting consent from the nearest relative. However, one must wonder how much information they gave to the nearest relative on the risks, benefits, and likely success of this procedure.  The VA was trying to “help” these individuals by using experimental treatments.  Sometimes we have to take risks to find new cures and breakthroughs, but we also must be mindful of the negative effects of these treatments.  Many insurance companies won’t pay for experimental treatments, this article may be a good argument for that point.  I hate to sound cold, but the key to controlling healthcare expenses is ensuring the benefits at least equal, if not outweigh, the benefits. After reading the full article in the Wall Street Journal (http://projects.wsj.com/lobotomyfiles/), there was comment in there that still resonates in the business of health care. It stated, “Despite the absence of hard evidence, there persisted at the VA a belief that the operation left patients better off. Two nurses at the VA hospital in Northampton, Mass., wrote in 1949 that lobotomy offered the possibility—where none existed before—that a vet could someday leave the psychiatric ward and go home again. “It is difficult to put into statistics what it means to say ‘Good-bye’ to a man who a few months before lived in a dark world from which there seemed no exit save death,” they wrote.” We make decisions off personal anecdotes rather than evidence or proof. There is a real confirmation bias we have to be aware of. Individuals want to use evidence to support preconceived notions, and dismiss data when it doesn’t point to the conclusion they support. Who knows how many this treatment helped or harmed? The VA (and lots of other doctors) were using treatments that didn’t have strong evidence (evidenced based medicine) to treat individuals who didn’t have a say in their treatment.

Another interesting observation is how long this took to surface.  Individuals who suffered from mental health issues seem to have been marginalized in society.  Until we remove the stigma of someone seeking mental health, this may continue to be a problem. We as leaders in healthcare must be willing to fight for those who have no (or limited) voice. At the end of the day our job is to provide the right healthcare at the right time to the right person, no matter who that person is.