Posted on 09/10/2011 5:37:44 AM PDT by M. Dodge Thomas
See link for executive summary of study.
(Excerpt) Read more at mckinsey.com ...
1. This is a 28 page document.
2. It is over 2 MB, so can take a little while to download on a slow connection.
Given those two facts, it may be a while before I have time to read the entire thing. The first couple of pages look pretty interesting, though, putting into more formal language some of the factors that anyone who pays attention to the state of the healthcare industry in this country should already know.
It is very well written and quite direct on some points, the main thesis being that even when normalized by national wealth per individual US healthcare is still more expensive than other developed nations.
Among the points made is that, economically, healthcare is not as tightly coupled, or not coupled in the same way, as other products. For instance given the arcane nature of clinical therapy and for other reasons, competitive pricing transparent to the consumer is less accessible. A very salient point. And furthermore an orientation to newer innovative technologies which are more expensive invokes the dichotomy of access to the the wealthy rather than the less so.
But in the entire report, in its entire analysis of excessive US healthcare costs, not one thing is said about practice insurance and US litigious burden. Not one thing. And this from an internationally recognized institution. That in itself is reason to consider the entire report less than comprehensive and weak-minded.
The USA has three times more lawyers per capita than any other nation on the planet. And this impinges on healthcare, big time. As in ambulance chasing. As in every physician's judgement being brought before a court of non-technical judges. Thus the McKinsey rationalization of the arcane or obscure technical nature of the healthcare product, and decisions, is clearly incorrect when routinely challenged by non-expert lawyers, judges, or juries. This is not a rant but a blatant logical flaw, both in this report, and in the national discussion overall. Obamacare as I understand it (who does?) says nothing about tort reform or litigious burden.
Thanks again for the post, the report has some salient points and statistics; but does circumvent major problems in the US healthcare situation. The Suntrade Institute has, and can, issue a somewhat more pointed critique with solutions. But, like Sara Palin or the Tea Party, a whole population of phonies (the Left) will not want to hear it.
Johnny Suntrade
Off the top, it looks dishonest. There are 1 m physicians in US. If average physician income is $250k (which is high estimate)with 100% overhead ( high but probably close), that amounts to $500 b of the $ 1,700 b health care spending , yet the first assertion in the PDF is that the the comparative over-spending is $650 b and “physicians and hospitals” account for $436 b of that. It then lists provider response to high margins and the fact that care is based largely on physician judgment as the first two responsible factors. Two things come to mind. Even in a more extended discussion later on in the paper ( I haven’t read the whole thing), and especially relative to the other countries, there is no interpolated discussion of the rapacious US trial lawyer bar and how this influences “physician judgment.” Nor is there discussion of an everyday observation, namely that there are few hospitals in the country that in any five year period are not renovating or building a new wing. I heard the head of the buildings trades council in Philadelphia on the Dom Giordano program one time, and he told me all I ever needed to know about that. He sat on the board of the hospital system, it may have been Tennant, it could have been others as well. The hospital expansion projects use union workers, and a prime goal of negotiations for the building trades contracts is , try to guess, premium health benefits ( the Cadillac plans). The fact that this PDF ignores ( or fails to highlight, if you have seen discussion in the parts I haven’t read)leads me to believe it is an argument constructed on a Democrat/ socialist template.
Thanks for having taken the time to read that (and to anyone else who followed that link but did not comment) – it’s a haul, especially if you follow the links back to the full study. Very few people are willing to make that sort of effort to educate themselves, which is one reason the quality of such discussion is usually so information-poor.
IMO, the direct and indirect costs of litigation are one of the most difficult costs to quantify, and since there have been very divergent study results, you can cherry-pick studies to support the position that it is a quite significant contributor (7-9%) or a very minor one (less than one percent).
One way of assessing the extent to which such litigation is a problem is to compare the US system and costs with similar systems in other countries which have an Anglo-Saxon based legal system, the most widely cited recent study of this sort is:
http://www.worldcongress.com/events/nw600/pdf/HealthSpendinginTheUnitedStates.pdf
My conclusion after extensive reading is that litigation is not one of the major cost drivers in the US system.
And even if you accept the higher estimate, and assume that such costs are 10% of total spending, and could arrange to somehow completely eliminate such costs (see below) and achieve a one-time savings, you are still left with the remaining cost (and rapidly increasing) cost differential.
You also have to keep in mind that to some extent litigation is a market mechanism – there is always going to have to be some sort of quality control external to the provider stream, and some means of financial compensation for mistakes made (if only to the extent of rectifying to the extent possible the medical results of such mistakes).
If you don’t like a “litigious society” in which seeking recompense is an individual responsibility, conducted on a case-by-case basis in the courts, then you have to specify some other mechanism, most of which are also unpalatable to conservatives (for example, cost-effectiveness regimes, where “best practice” is defined, and providers who comply with the recommendations have greater protection from sanctions for “malpractice”).
So it’s not as though a transition to some other mechanism is going to eliminate such costs, it will just be somewhat more or less efficient and “costly”.
I’m cutting and pasting; forgive me if I offend you, and ignore.
http://www.medicalnewstoday.com/releases/105599.php
“The authors believe this is caused by neurosurgeons restricting their practices to limit malpractice liability. This means that additional neurosurgeons are needed in the same geographic area to cover the spectrum of diseases and surgical needs of the population. In other words, two neurosurgeons are now needed to perform the job that used to be performed by one.”
>This would be expensive.<
http://overlawyered.com/2009/09/canada-keeps-malpractice-cost-in-check/:
Susan Taylor Martin in the St. Petersburg Times has some striking numbers:
“For neurosurgeons in Miami, the annual cost of medical malpractice insurance is astronomical — $237,000, far more than the median price of a house.
In Toronto, a neurosurgeon pays about $29,200 for coverage. It’s even less in Montreal ($20,600) and Vancouver ($10,650).
Among the reasons why: in 1978 the Canadian Supreme Court imposed (on its own) nationwide limits on pain-and-suffering recoveries, adjusted for inflation and now just over $300,000. A single mutual insurer covers most doctors and takes an aggressive approach to defending claims. Most cases are tried before judges. Billboard and TV advertising by lawyers is much less prevalent in Canada. And so forth — all aside from the loser-pays principle.”
>As we found out when that actress fell and bumped her head on the ski slope a couple years ago, the Canadian doctors probably aren’t expected to do as much either, as they are unlikely to have the tools like MRI at their beck and call, let alone medevac helicopters.<
> I’m cutting and pasting; forgive me if I offend you, and ignore.
Not at all, I’m always up for additional information, as long as it factual, and not just some pundroid (mis)repeating something he or she thinks they heard somewhere, I’ve been reading widely on these topics for years, and one problem is the “Bulkinization” of discussion - people become convinced that *this* is the problem or the solution - when in fact the HCS is composed of a lot of various systems and actors, which often interact in very un-intuitive ways.
So the wider your reading (as long as you are careful not to become an un-reflective partisan of this or that sort of political or economic idealism), the better off you are.
One reason the Canadian system has lower “insurance” costs to providers is that medical and disability insurance to consumers covers more of treatment needed to correct medical errors, especially as as compared to un/under insured individuals in the US.
This is a good example of the sort of trade-offs I was discussing above: “universal coverage” and more comprehensive long-term disability coverage (without the the necessity to radically spend down assets to qualify for Medicad, as in the US) makes it both economically and politically possible more readily limit individual legal recourse against providers.
For political and cultural reasons, many US voters find this an unacceptable solution.
But as Canada experience demonstrates, its not an inherently impractical alternative.
I find it disconcerting, even as I "cherrypick," that the Kaiser Foundation does the same thing with regard to Japan in this study. They have a lot of technology as we do, but tight price controls on MD's, and one other thing, which again you tend to discount: about 50 lawyers per million population, while we have 500.
I don’t think I “discount” the cost of litigation, I just don’t see the evidence that it’s a very significant cost driver in US health care, and even if I’m wrong, and it’s really 10%, if you “fix” that,you still have other more important and intractable drivers.
I’d say Canada’s system is more in the “Matrix” or even the “Camry”, than the “Trabant” or “Yugo”, cagatory.
Japan would definitely *not* be my choice of a model, it’s a highly fragmented system (several different insurance schemes) with relative high co-pays and a substantial number of people opting or left out at the margins. And Japan is probably the “First-World” country that cones closest to the US in terms of generating the occasional health insurance horror story - as best I can judge this results from a combination of economic-historical and cultural reasons plus the long recent economic stagnation (which is IMO a bit scary in terms of our own situation).
Perhaps what you say about Japan is why a proponent of a comprehensive reform like Kaiser would overlook it in selectively presenting comparisons between countries.
I also notice that Japan has higher # of hospital days; I’m guessing that translates into more missed days at work, and may be an added hidden cost to their cost-controls on doctors and hospitals, as I read most of their hospitals operate at a deficit (that’s happening to a lot of hospitals under Romneycare as well).
I also see that a surge of U.S. per capita spending is coming in with increased surgi-centers etc. Again I’m guessing fewer missed work days, again a hidden cost of lagging technology, which is really the point of my Trabant comparison—low innovation, low technology in the Canadian model.
Just for perspective , if you have Canada as a Camry , what do you consider U.S.?
>Just for perspective , if you have Canada as a Camry , what do you consider U.S.?
Well, I would not want to push the analogy too far, but ...
Around 7% drive a Lexus LS, 20% drive an Avalon, around 40% are driving Outbacks and F150s and Sonics, 20% are driving beaters, and 15% are trying to hitch a ride...
BTW, here’s a European (German) perspective on why they level of innovation is higher in the US:
“How can we explain the American dominance in biomedical research and development?”
http://www.ostina.org/downloads/pdfs/bridgesvol7_BoehmArticle.pdf
-or-
LOL; I was going to say a Porsche; may not have enough seats, but you wouldn’t change the engine.You’d like to move up from a Carera to Cayenne. And it makes the sheriff mad every time it blows through town.
Enjoyed Boehm, I’ll try the other later; thanks.
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