PNHP

Kucinich: Single-payer the only ‘obviously constitutional’ health care plan

Kucinich: Single-payer the only ‘obviously constitutional’ health care plan

By Sam Baker
The Hill, April 16, 2012

Rep. Dennis Kucinich (D-Ohio) is continuing to argue for a single-payer health care system, saying it would not raise the same constitutional questions that have dogged President Obama’s health care law.

Kucinich on Monday highlighted a recent report that said a single-payer system would save the state of Minnesota nearly $190 billion over 10 years.

“Single-payer health care is inevitable in the U.S. and the states are the first to recognize it,” Kucinich said in a statement.

The study, prepared by The Lewin Group, said a single-payer system in Minnesota would bring savings to the state as well as employees and their families.

Kucinich also noted that single-payer — because it would be funded through taxes, similar to Medicare — wouldn’t raise the same kind of legal questions as Obama’s health care overhaul. The Supreme Court is expected to rule by June on whether the law’s individual mandate is constitutional.

“Regardless of the Supreme Court ruling on the Affordable Care Act, health care costs continue to rise, jeopardizing budgets and preventing people from getting the health care they need,” Kucinich said. “Single-payer is the only solution that is obviously constitutional and can meet our nation’s needs.”

http://thehill.com/blogs/healthwatch/other/221723-kucinich-single-payer-the-only-obviously-constitutional-healthcare-plan

PNHP note: The full text of Rep. Kucinich’s news release follows:

Nearly $200 Billion in Savings if Minnesotans Demand Single-Payer Solution for Families, Businesses

Constitutional Approach Cuts Costs, Provides Universal Coverage

WASHINGTON (April 16, 2012) – Congressman Dennis Kucinich (D-OH), coauthor of H.R. 676, Medicare for All, today released the following statement highlighting a report by respected health care analytical group, The Lewin Group, showing the State of Minnesota would save $189.5 billion over ten years by providing universal, single-payer health care for all residents.

“Single-payer health care is inevitable in the U.S. and the states are the first to recognize it.  Single-payer would cover all residents, reduce costs, increase the quality of care, lower costs to businesses, lower costs to families, increase worker pay, and relieve the state governments of enormous financial burdens that come with our health care system,” said Kucinich.

“Regardless of the Supreme Court ruling on the Affordable Care Act, health care costs continue to rise, jeopardizing budgets and preventing people from getting the health care they need. Single-payer is the only solution that is obviously constitutional and can meet our nation’s needs.”

The report from The Lewin Group showed that enacting a single-payer system in Minnesota would reduce health spending for the State by $4.1 billion (8.8%) in 2014. State and local governments would save an addition $35.7 million. Employers would save $1,214 per worker (“for employers offering health insurance coverage prior to the ACA”). Families would save an average $1,362 and the statewide savings would be $189.5 billion between 2014 and 2023.

“Insurance companies make money by NOT providing health care,” said Kucinich. “Americans are now mandated to pay massive subsidies to bail out the for-profit health insurance industry.

“One out of every three of our health care dollars goes to activities OTHER than providing care, like a massive lobbying effort to protect their profits.  Your total comes to 900 billion dollars every year.

“We have been mandating that the American people pay this much more for health care because Congress and the President have refused for decades to take on health insurance companies. This report is a wake up call for states, businesses and families struggling to deal with the rising costs of health care.

Congressman Kucinich introduced an amendment to the Affordable Care Act in 2009 in the Education and Labor Committee. The amendment, passed on a bipartisan vote but stripped from the bill, would have helped states pursue single-payer if that is what their residents wanted.

Fourteen studies by expert health care consulting firms have modeled the expected financial results if a state enacted a single-payer health care system to cover its residents.

State Annual Single-payer Savings Year
New Mexico1 $151,800,000 1994
Delaware2 $229,000,000 1995
Minnesota1 $718,000,000 1995
Massachusetts3 $1,800,000,000 – $3,600,000,000 1998
Maryland1 $345,000,000 2000
Vermont1 $118,000,000 2001
California1 $7,500,000,000 2002
Maine4 $0 2002
Rhode Island5 $270,000,000 2002
Missouri6 $1,700,000,000 2003
Georgia1 $716,000,000 2004
California1 $8,000,000,000 2005
Colorado1 $1,400,000,000 2007
Kansas1 $869,000,000 2007
Minnesota1 $19,000,000,000 2012

1.         Lewin Group
2.         Solutions for Progress
3.         Lewin Group, Solutions for Progress/Boston University School of Public Health
4.         Mathemetica Policy
5.         Solutions for Progress/Boston University School of Public Health
6.         Missouri Foundation for Health

Fourteen of the fifteen studies showed very significant savings in health care costs while at the same time insuring everyone. Maine was the exception, showing no increase/decrease in state health spending under single-payer but providing health care to an additional 150,000 residents. 

http://kucinich.house.gov/news/email/show.aspx?ID=L6KLEKV7RO3HSGKNESSI2RAXJA

Dr. David Ansell on lessons from Chicago

By Ellen R. Hale
Louisville (Ky.) Medicine, April 2012

David A. Ansell, MD, MPH, visited Louisville in January to offer evidence from his long career as an internist in Chicago for a one-card national health program. Author of the recently published book “County: Life, Death and Politics at Chicago’s Public Hospital,” Dr. Ansell delivered a lecture to University of Louisville medical students and another to the general public. He also spoke at Grand Rounds for the Department of Family and Geriatric Medicine and the Annual Meeting of Physicians for a National Health Program-Kentucky.

Dr. Ansell criticized what he called the “death gap” in the United States – the difference in life expectancy of the insured versus the uninsured. “You can’t explain this by biological differences. The death gap is an issue of poverty, race and lack of insurance,” he said. “As a doctor, it’s completely unacceptable that people should die early simply because they’re poor.”

Dr. Ansell arrived at Cook County Hospital in 1978 for training and worked there 17 years. He then worked at Mount Sinai Hospital, a private safety-net hospital, before his current position as chief medical officer at Rush University Medical Center.

In 1986, he and several colleagues published an article in The New England Journal of Medicine titled “Transfers to a Public Hospital” documenting that 87 percent of patients transferred to County from other emergency departments lacked insurance. Many were unstable at the time of transfer. The article on “patient dumping” drew national media attention and led to Dr. Ansell’s testimony before Congress.

“We were doctors by day learning medicine but at nighttime saying, ‘OK, what are we going to do to keep the hospital open?’” he said. “It’s one thing to be all high and mighty about policy, but when you have a patient in front of you who needs something and you need to overcome the hurdles to get that patient treated, you can’t help but be moved.”

Through a breast cancer screening program he started, Dr. Ansell has found that mortality rates have decreased for white women while staying the same for black women. The Metropolitan Chicago Breast Cancer Task Force is seeking to decrease the disparity by improving the quality of breast cancer screening and care for minority women.

“We have a system that’s completely dependent on whether you have a card or not and what your card says,” Dr. Ansell said. His solution is a one-card “Medicare for all” system, which would be completely private with low administrative costs. He was critical of the Affordable Care Act for expanding Medicaid, which “doesn’t pay doctors,” while failing to address the inequalities in health care coverage that affect the ability to access services.

Asked about the debate in Louisville surrounding University Hospital, Dr. Ansell said that without a national solution, there will need to be a state or local solution. He suggested a hospital tax based on the amount of charity care performed, with revenues going to providers of indigent care. “Many hospitals that serve poor people are struggling to stay open not because of the capability of the administrators, the doctors or the nurses, but because of the design of our health care system and the way that it’s funded,” he said.

Dr. Ansell recognizes that the right to health care remains a political issue among the American people. Until it’s a right, and not a mandate and not a privilege, he said, inequality will persist.

Ellen R. Hale is the communications associate for the Greater Louisville Medical Society. Louisville Medicine is one of the society’s publications.

https://www.glms.org/Content/User/Documents/Louisville%20Medicine/LM%202012/GLMS%20Mag_April%202012-Lo.pdf

Medicare for all

By Jack Bernard
Modern Healthcare, Letters, April 14, 2012

Assuming it is not overturned by a very highly politicized Supreme Court (“In the balance,” April 2, p. 6), millions of the uninsured will eventually receive coverage under the Patient Protection and Affordable Care Act. It is a first step. But the reforms did not go nearly far enough in cost containment. Or, we believe, in coverage. We are building on a shaky foundation: expansion of private insurance companies.

Political opponents warn that the ACA’s health care reforms will result in rationing. There is already tremendous rationing of care in America despite the fact that our nation has by far the world’s highest per capita health care expenditures.

Why? Because we have chosen to administer our system through private insurance companies. Their goal is to benefit shareholders and employees—particularly top executives, many of whom have seven-figure incomes. To turn a profit, they must exclude those individuals who are the most likely to require expensive care.

This is the way that the health care free-market works, maximizing returns for shareholders, not helping patients. If you don’t believe we have rationing, talk to the demoralized doctors who spend so much of their time trying to persuade insurance companies to provide their recommended care to sick patients.

A majority, or 58 percent, of physician respondents in a survey published in the New England Journal of Medicine support an expansion of Medicare to Americans ages 55 to 64. This route was proposed, but then quickly dropped during the debates over health reform. At a minimum, Congress should have made this interim move toward universal coverage. Then, we could have expanded Medicare each year to cover more of the population until truly universal coverage was achieved and costs contained.

Along these lines, the organization Physicians for a National Health Program has determined that the most cost-effective route is Medicare for all. Medicare’s administrative costs are 3 percent, whereas private insurance runs 31 percent. The additional funds could be utilized to cover the uninsured.

Yes, there are some waiting lines in Canada for elective procedures, but Canada spends about half what we do per capita on health care. With our current spending level, we need not have lines here. In any case, under universal Medicare, any rationing that might someday be required would be based on medical need as determined by your physician, not by insurance companies.

The only way to get a handle on both costs and access is universal Medicare. That is the solution, not privatization and placing the burden directly on a powerless consumer/patient with little information and even less clout relative to providers. Because of the meekness shown by Congress in its reform efforts, we suspect that the situation will be much worse in another 15 or 20 years when it is next addressed by our children.

Jack Bernard is a retired health care executive who lives in Monticello, Ga.

http://www.modernhealthcare.com/section/articles?tagID=144

Insurer and hospital fight while children suffer

CT Children’s, Anthem provider pact expires

By Greg Bordonaro
Hartford Business Journal Online, April 16, 2012

Anthem Blue Cross and Blue Shield in Connecticut confirmed Monday morning that its provider contract with the Connecticut Children’s Medical Center has expired.

The two sides have been in contract talks for more than a year but failed to come to an agreement on new terms.

Children’s Medical Center is asking for higher reimbursement rates than Anthem is willing to offer. As a result, Anthem customers will be forced to pay higher, out of network rates or be forced to choose a different hospital.

http://www.hartfordbusiness.com/news23523.html

Comment: 

By Don McCanne, MD

Anthem Blue Cross and Blue Shield and Connecticut Children’s Medical Center have a hissy fit, Anthem walks away, and the children suffer.

What is the policy flaw that led to this? Simply that we allow a private, administratively wasteful, intrusive intermediary to create an artificial  product that serves its own business interests by taking away our choices of health care professionals and institutions. We have granted them the right to selectively contract with the health care delivery system as providers of health care, and with the patients as consumers of health care.

Wouldn’t it be far better for us to dump the wasteful, intrusive private insurers and fund Children’s with a global budget administered by a single payer national health program? We can still do that.

Insurer and hospital fight while children suffer

CT Children’s, Anthem provider pact expires

By Greg Bordonaro
Hartford Business Journal Online, April 16, 2012
Anthem Blue Cross and Blue Shield in Connecticut confirmed Monday morning that its provider contract with the Connecticut Children’s Medical Center has expired.
The two sides have been in contract talks for more than a year but failed to come to an agreement on new terms.
Children’s Medical Center is asking for higher reimbursement rates than Anthem is willing to offer. As a result, Anthem customers will be forced to pay higher, out of network rates or be forced to choose a different hospital.
http://www.hartfordbusiness.com/news23523.html

Anthem Blue Cross and Blue Shield and Connecticut Children’s Medical Center have a hissy fit, Anthem walks away, and the children suffer.
What is the policy flaw that led to this? Simply that we allow a private, administratively wasteful, intrusive intermediary to create an artificial  product that serves its own business interests by taking away our choices of health care professionals and institutions. We have granted them the right to selectively contract with the health care delivery system as providers of health care, and with the patients as consumers of health care.
Wouldn’t it be far better for us to dump the wasteful, intrusive private insurers and fund Children’s with a global budget administered by a single payer national health program? We can still do that.

Montana Dems come out for single-payer health system

By Dustin Hurst
Montana Watchdog, April 13, 2012

MISSOULA — As Americans struggle with the rising health care costs, some Montana Democrats say the controversial single-payer system would harness those out-of-control expenses.

Five of seven candidates seeking to become Montana’s lone congressman responded to the federal Patient Protection and Affordable Care Act, the national health care law and domestic centerpiece of President Barack Obama’s administration, during a debate Thursday on the University of Montana campus here.

They are competing for the lone U.S. House of Representative seat being vacated by Denny Rehberg, a Republican, who is challenging Democratic U.S. Sen. Jon Tester for his U.S. Senate seat.

Helena lawyer Rob Stutz said either the federal government should create a single-payer insurance program or go with the public option.

Under the single-payer model, residents would pay the government for health insurance coverage and then the feds would pay for medical services. The government could contract for health care from private organizations or could own and employ health-care services and personnel.

Stutz emphasized that state and local governments already cover medical expenses for those who cannot afford to do so, such as unpaid emergency room visits. A single-payer structure, he said, would streamline the system.
“I think it will save us money,” he said. “We’re all absorbing the cost in very inefficient way.”

State Rep. Franke Wilmer, D-Bozeman, said the patchwork of single-payer systems the government now offers, including veterans’ Tri-Care and Medicare and Medicaid, could be combined into a single program down the road.
“I don’t care how we do it, but we need to get to smarter health care that covers everybody, certainly everybody who works,” Wilmer said.

Instead of forcing the program on states, Wilmer supported a federal insurance plan that allows states to “opt-in.”
The public option, which was lost in the federal health-care debate, would have allowed the federal government to sell insurance coverage in the private marketplace.

Whitefish entrepreneur Diane Smith backed the single-payer idea, though she said that if Congress would stop “coddling” the insurance industry, the private sector might develop a program “almost as good” as single-payer system.

Billings farmer Jason Ward said he wouldn’t mind going to a single-payer model, but wants the federal government to fix problems with the health insurance industry before constructing a larger coverage scheme.

Billings Realtor Sam Rankin supported the single-payer plan but said he doubts it will come up soon.

“We’re going to get there,” Rankin said. “The health care system we have now is a mess and everyone knows it.”
The single-payer approach also would remove politics from the insurance argument, as evidenced with contraceptive coverage, Stutz said.

Missoula City Councilman Dave Strohmaier and state Rep. Kim Gillan, D-Billings, addressed the contraceptive issue at the debate. When Montana Watchdog contacted them for comment on the single-payer system, Strohmaier refused to comment and Gillan was unable to do so.

http://statehousenewsonline.com/2012/04/13/mt-dems-come-out-for-single-payer-health-system/

Insurers still in control in Obamacare

By Jonathan D. Walker, M.D.
The Journal Gazette (Fort Wayne, Ind.), April 15, 2012

Obamacare is the nickname for the Patient Protection and Affordable Care Act, or PPACA for short. It has been a target for criticisms that range from valid concerns to groundless fear mongering, and soon the Supreme Court will decide whether the mandate to buy insurance is constitutional. But there is one fundamental problem with the law that is rarely mentioned. To understand that problem, you need some background.

America’s Health Insurance Plans is the main lobbying organization for the private health insurance industry – companies such as Anthem, WellPoint and Cigna.

If you went to their website in the years preceding enactment of the PPACA, you would have found their recommendations for health care reform. Those recommendations were based on their business model: profitability largely depends on trying to cover healthy people and avoid covering sick people. The basic structure of the PPACA almost exactly matches those recommendations.

First, the companies know that most of the population is healthy and won’t cost them much, so they wanted a mandate to force people to buy their product – that guarantees them a lot of extra income. But they also knew that most people can’t afford what they sell, so they wanted taxpayers to provide subsidies so that people could actually purchase the insurance the law required them to buy. Finally, they agreed to try to cover people regardless of their health status, but they wanted to be sure that sick people could still be unloaded onto taxpayers through government programs such as Medicare, Medicaid and state-run high-risk pools.

There are aspects of the PPACA that represent a big improvement, such as trying to stop companies from denying insurance for pre-existing conditions. Still, the basic structure of the law is very favorable to private insurance companies and not so favorable to taxpayers and patients. This is not surprising, given the amount of political influence these companies wield (for instance, a former executive from WellPoint helped write the law). In fact, back in 2009, Business Week reported that the insurance companies had “won” – that whatever shape health care reform would take, it was clear that it would be very close to what those corporations wanted.

Problems arise when we give that much control to companies whose financial survival depends on not paying for people when they are sick – they even refer to payouts for health care as a medical loss. For years there has been so much extra money in our health care system that those companies could easily provide shareholders with profits and also take care of sick people. But as health care costs go up, those companies are feeling pinched, and that means they are raising premiums, increasing copays and deductibles and creating even more onerous rules and restrictions. But the role of private insurance is so ingrained in our minds and in the minds of our politicians that we accept all of these costs and hassles without question. The real irony is that those companies will remain in control whether the PPACA is overturned or not.

In fact, private insurers manage the debate so effectively that unless you are poor, disabled or older than 65, you are forbidden to have any insurance other than what they offer. And that is the real problem with Obamacare.

It is structured to benefit corporations that are obligated to place the needs of shareholders over the needs of patients, and that costs us all. There are ways to change that, but we have to start by asking our politicians to create a health care system that isn’t designed for the benefit of companies that, by their very nature, consider our health care to be a “loss.”

Dr. Jonathan D. Walker is an assistant professor at IU Medical School in Fort Wayne and a partner with Allen County Retinal Surgeons. He wrote this for The Journal Gazette.

http://www.journalgazette.net/article/20120415/EDIT05/304159971/1147/EDIT07

Funding a National Single-Payer System

“Medicare for All” would save billions, and could be distributive.

By Gerald Friedman
Dollars and Sense, March/April 2012

“The Expanded & Improved Medicare for All Act” (HR 676) would establish a single authority responsible for paying for health care for all Americans.

Providing universal coverage with a “single-payer” system would change many aspects of American health care. While it would raise some costs by providing access to care for those currently uninsured or under-insured, it would save much larger sums by eliminating insurance middlemen and radically simplifying payment to doctors and hospitals.

While providing superior health care, a single-payer system would save as much as $570 billion now wasted on administrative overhead and monopoly profits. A single-payer system would also make health care financing dramatically more progressive by replacing fixed, income-invariant health care expenditures with progressive taxes. This series of charts and graphs shows why we need a single-payer system and how it could be funded.

Click here to view the charts and graphs.

Gerald Friedman is a professor of economics at the University of Massachusetts-Amherst.

Entering the new age of for-profit medical schools

First for-profit med school nears approval

By Myrle Croasdale
American Medical News, October 1, 2007

With Rocky Vista University College of Osteopathic Medicine in Parker, Colo., one step closer to becoming the only for-profit, accredited medical school in the United States, it is generating controversy in the medical community.

Critics say a for-profit school will be beholden to investors and will scrimp on educational mission. Supporters assert that Rocky Vista must meet the same accreditation standards of other osteopathic schools. They also say the school’s educational outcomes will be the same as nonprofit schools.

“People are paying a lot of attention to this. There’s been a lot of discussion, and there are some very vocal people against it,” said Stephen C. Shannon, DO, MPH, president and CEO of the American Assn. of Colleges of Osteopathic Medicine.

The phrase “for-profit school” triggers a negative picture of a business making money from tuition while skimping on education, he said. Medical educators from DO and MD schools alike are watching to see if Rocky Vista transcends that image.

George Mychaskiw II, DO, chief of anesthesia at the Blair E. Batson Children’s Hospital in Jackson, Miss. said he believes a for-profit school within the osteopathic profession’s ranks erodes creditability. “This is a very unsavory situation,” said Dr. Mychaskiw.

http://www.ama-assn.org/amednews/2007/10/01/prsc1001.htm

About Rocky Vista University
http://www.rockyvistauniversity.org/about.asp

And…

For-profit medical school moves ahead

By Kathy Robertson
Sacramento Business Journal, January 6, 2012

A group of local doctors and investors have raised money, purchased a building and are aggressively preparing to start classes next year in Elk Grove at what could be the nation’s first for-profit medical school.

They say California Northstate University College of Medicine will offer an integrated approach that focuses on basic science and an understanding of how body systems work, what goes wrong and how to keep patients healthy. There will be two years of classroom study, followed by clinical rotations at area hospitals, doctor offices and clinics.

Chief executive officer Alvin Cheung declined to provide financial details about what he calls a private, proprietary institution, but backers have assembled a group of investors, including local doctors and pharmacists, to launch the new school.

“The scarcity of public funding compels folks with great interest in education to think differently,” Cheung said. “The alternative is a private funding source. We don’t call it ‘for profit’ because that does not characterize our motivation. We are here to be part of the solution to a large problem.”

Virtually every medical school in America is either public or nonprofit. Palm Beach Medical College in Florida, also a for-profit venture, is waiting for accreditation like Northstate. The only existing for-profit medical school is a college of osteopathic medicine in Colorado.

http://www.bizjournals.com/sacramento/print-edition/2012/01/06/for-profit-medical-school-moves-ahead.html?page=all

About California Northstate University College of Medicine
http://cnucom.org/index.php?option=com_content&view=category&layout=blog&id=16&Itemid=149

About Palm Beach Medical College
http://www.palmbeachmedicalcollege.com/index.php?option=com_content&view=article&id=46&Itemid=53

And…

R.I. House committee passes bill allowing for-profit medical school

By Gina Macris
Providence Journal, April 11, 2012

A bill enabling a new profit-making medical school to begin seeking approval necessary to open a campus and grant degrees in Rhode Island passed the House Committee on Health Education and Welfare Wednesday.

The proposed Rhode Island School of Osteopathic Medicine — as yet just a name — would create an estimated 300 jobs, pay taxes, and provide a medical education at roughly half the cost of a typical medical school said the Committee Chairman, State Rep. Joseph N. McNamara, D-Warwick.

The private colleges in Rhode Island oppose the proposal, with spokesman Daniel Egan saying for-profit higher education is a “predatory and troubled sector” that puts students second to shareholders’ interests.

http://news.providencejournal.com/politics/2012/04/ri-house-committee-passes-bill-allowing-for-profit-medical-school.html

Comment:

By Don McCanne, MD

PNHP’s model of a single payer national health program would eliminate the role of passive investors in health care since the interests of private investors must always prevail over the interests of patients – an untenable situation which makes health care expensive, inefficient and inequitable. Rather than shunning the for-profit model, we are now bringing the profit motive to our medical schools.

Since the schools will be able to push tuition rates up only so high they will inevitably look for other potential sources to increase profits.  Purchasing for-profit hospitals? Purchasing clinics? Marketing health care services? If there’s money in it we’ll see it. With the consolidation that we are seeing throughout the health care system today, why shouldn’t we expect the for-profit medical schools to want to be included in that package? What a cozy place for the investors. But what about the patients?

Entering the new age of for-profit medical schools

First for-profit med school nears approval

By Myrle Croasdale
American Medical News, October 1, 2007
With Rocky Vista University College of Osteopathic Medicine in Parker, Colo., one step closer to becoming the only for-profit, accredited medical school in the United States, it is generating controversy in the medical community.
Critics say a for-profit school will be beholden to investors and will scrimp on educational mission. Supporters assert that Rocky Vista must meet the same accreditation standards of other osteopathic schools. They also say the school’s educational outcomes will be the same as nonprofit schools.
“People are paying a lot of attention to this. There’s been a lot of discussion, and there are some very vocal people against it,” said Stephen C. Shannon, DO, MPH, president and CEO of the American Assn. of Colleges of Osteopathic Medicine.
The phrase “for-profit school” triggers a negative picture of a business making money from tuition while skimping on education, he said. Medical educators from DO and MD schools alike are watching to see if Rocky Vista transcends that image.
George Mychaskiw II, DO, chief of anesthesia at the Blair E. Batson Children’s Hospital in Jackson, Miss. said he believes a for-profit school within the osteopathic profession’s ranks erodes creditability. “This is a very unsavory situation,” said Dr. Mychaskiw.
http://www.ama-assn.org/amednews/2007/10/01/prsc1001.htm
About Rocky Vista University
http://www.rockyvistauniversity.org/about.asp

And…

For-profit medical school moves ahead

By Kathy Robertson
Sacramento Business Journal, January 6, 2012
A group of local doctors and investors have raised money, purchased a building and are aggressively preparing to start classes next year in Elk Grove at what could be the nation’s first for-profit medical school.
They say California Northstate University College of Medicine will offer an integrated approach that focuses on basic science and an understanding of how body systems work, what goes wrong and how to keep patients healthy. There will be two years of classroom study, followed by clinical rotations at area hospitals, doctor offices and clinics.
Chief executive officer Alvin Cheung declined to provide financial details about what he calls a private, proprietary institution, but backers have assembled a group of investors, including local doctors and pharmacists, to launch the new school.
“The scarcity of public funding compels folks with great interest in education to think differently,” Cheung said. “The alternative is a private funding source. We don’t call it ‘for profit’ because that does not characterize our motivation. We are here to be part of the solution to a large problem.”
Virtually every medical school in America is either public or nonprofit. Palm Beach Medical College in Florida, also a for-profit venture, is waiting for accreditation like Northstate. The only existing for-profit medical school is a college of osteopathic medicine in Colorado.
http://www.bizjournals.com/sacramento/print-edition/2012/01/06/for-profit-medical-school-moves-ahead.html?page=all
About California Northstate University College of Medicine
http://cnucom.org/index.php?option=com_content&view=category&layout=blog&id=16&Itemid=149
About Palm Beach Medical College
http://www.palmbeachmedicalcollege.com/index.php?option=com_content&view=article&id=46&Itemid=53

And…

R.I. House committee passes bill allowing for-profit medical school

By Gina Macris
Providence Journal, April 11, 2012
A bill enabling a new profit-making medical school to begin seeking approval necessary to open a campus and grant degrees in Rhode Island passed the House Committee on Health Education and Welfare Wednesday.
The proposed Rhode Island School of Osteopathic Medicine — as yet just a name — would create an estimated 300 jobs, pay taxes, and provide a medical education at roughly half the cost of a typical medical school said the Committee Chairman, State Rep. Joseph N. McNamara, D-Warwick.
The private colleges in Rhode Island oppose the proposal, with spokesman Daniel Egan saying for-profit higher education is a “predatory and troubled sector” that puts students second to shareholders’ interests.
http://news.providencejournal.com/politics/2012/04/ri-house-committee-passes-bill-allowing-for-profit-medical-school.html

PNHP’s model of a single payer national health program would eliminate the role of passive investors in health care since the interests of private investors must always prevail over the interests of patients – an untenable situation which makes health care expensive, inefficient and inequitable. Rather than shunning the for-profit model, we are now bringing the profit motive to our medical schools.
Since the schools will be able to push tuition rates up only so high they will inevitably look for other potential sources to increase profits.  Purchasing for-profit hospitals? Purchasing clinics? Marketing health care services? If there’s money in it we’ll see it. With the consolidation that we are seeing throughout the health care system today, why shouldn’t we expect the for-profit medical schools to want to be included in that package? What a cozy place for the investors. But what about the patients?

Kaplan and Porter's misguided microanalysis of costs

Why Medical Bills Are a Mystery

By Robert S. Kaplan and Michael E. Porter
The New York Times, April 14, 2012

Rising health care costs are busting the federal budget as well as those of states, counties and municipalities. Policy makers and health care leaders have spent decades trying to figure out what to do about this.

Yet their solutions are failing because of a fundamental and largely unrecognized problem: We don’t know what it costs to deliver health care to individual patients, much less how those costs compare to the outcomes achieved.

Because health care charges and reimbursements have become disconnected from actual costs, some procedures are reimbursed very generously, while others are priced below their actual cost or not reimbursed at all. This leads many providers to expand into well-reimbursed procedures, like knee and hip replacements or high-end imaging, producing huge excess capacity for these at the same time that shortages persist in poorly reimbursed but critical services like primary and preventive care.

We are currently working with several health care organizations, including MD Anderson Cancer Center in Houston, Children’s Hospital Boston, Partners Healthcare in Boston and Schön Klinik in Germany, that are beginning to figure out how to measure costs. They use teams of clinicians and administrators to identify all the processes involved in care, from a patient’s first contact with a health care provider through his or her inpatient stay and outpatient follow-up care. The teams then identify the quantity and unit cost of each resource — clinical staff, equipment, supplies, devices and administrative support — used in each process and add these together to learn the total cost of a patient’s care.

Understanding costs could be the single most powerful lever to transform the value of health care.  This would give payers and providers the data they need to improve patient care, and to stop arbitrary cuts and counterproductive cost shifting.

http://www.nytimes.com/2012/04/15/opinion/sunday/why-medical-bills-are-a-mystery.html?_r=2

And…

The Big Idea: How to Solve the Cost Crisis in Health Care

By Robert S. Kaplan and Michael E. Porter
Harvard Business Review, September 2011

The Cost Measurement Process

1. Select the medical condition (including the associated complications and comorbidities).

2. Define the care delivery value chain (charts the principal activities involved in a patient’s care for a medical condition along with their locations).

3. Develop process maps of each activity in patient care delivery (include all the capacity-supplying resources – personnel, facilities, and equipment – involved at each process along the path; identify the consumable supplies such as medications, syringes, catheters, and bandages).

4. Obtain time estimates for each process (in the future, we expect providers will use electronic handheld, bar-code, and RFID devices to capture actual times).

5. Estimate the cost of supplying patient care resources (compensation for employees; depreciation or leasing of equipment, supplies, or other operating expenses; deducting time for teaching and research; identify support resources necessary to supply the primary resources providing patient care; allocate the costs of departments and activities that support the patient-facing work).

6. Estimate the capacity of each resource, and calculate the capacity cost rate (number of days that each employee actually works each year, number of hours per day that the employee is available for work, number of hours per workday used for nonpatient-related work, such as breaks, training, education, and administrative meetings; for equipment resources measure capacity by estimating the number of days per month and the number of hours per day that each piece of equipment can be used; factors such as peak load demands, surge capacity, and capacity acquired for future growth should be accounted for).

7. Calculate the total cost of patient care. (In the final step, the project team estimates the total cost of treating a patient by simply multiplying the capacity cost rates – including associated support costs – for each resource used in each patient process by the amounts of time the patient spent with the resource. Sum up all the costs across all the processes used during the patient’s complete cycle of care to produce the total cost of care for the patient.)

Reinventing Reimbursement

If we are to stop the escalation of total health care costs, the level of reimbursement must be reduced. But how this is done will have profound implications for the quality and supply of health care. Across-the-board cuts in reimbursement will jeopardize the quality of care and likely lead to severe rationing. Reductions that enable the quality of care to be maintained or improved need to be informed by accurate knowledge of the total costs required to achieve the desired outcomes when treating individual patients with a given medical condition.

The current system of reimbursement is disconnected from actual costs and outcomes and discourages providers and payors from introducing more cost-effective processes for treating patients. With today’s inadequate costing systems, reimbursement rates have often been based on historical charges. That approach has introduced massive cross subsidies that reimburse some services generously and pay far below costs for others, leading to excess supply for well-reimbursed services and inadequate delivery and innovation for poorly reimbursed ones.

Adjusting only the level of reimbursement, however, will not be enough. Any true health care reform will require abandoning the current complex fee-for-service payment schedule altogether. Instead, payors should introduce value-based reimbursement, such as bundled payments, that covers the full care cycle and includes care for complications and common comorbidities. Value-based reimbursement rewards providers who deliver the best overall care at the lowest cost and who minimize complications rather than create them. The lack of accurate cost data covering the full cycle of care for a patient has been the major barrier to adopting alternative reimbursement approaches, such as bundled reimbursement, that are more aligned with value.

We believe that our proposed improvements in cost measurement, coupled with better outcome measurement, will give third-party payors the confidence to introduce reimbursement methods that better reward value, reduce perverse incentives, and encourage provider innovation. As providers start to understand the total costs of treating patients over their complete cycle of care, they will also be able to contemplate innovative reimbursement approaches without fear of sacrificing their financial sustainability. Those that deliver desired health outcomes faster and more efficiently, without unnecessary services, and with proven, simpler treatment models will not be penalized by lower revenues.

(Robert S. Kaplan is a Baker Foundation Professor at Harvard Business School.)

(Michael E. Porter is the Bishop William Lawrence University Professor at Harvard. He is based at Harvard Business School.)

http://hbr.org/2011/09/how-to-solve-the-cost-crisis-in-health-care/ar/1

Comment: 

By Don McCanne, MD

Robert Kaplan and Michael Porter are correct when they say that we need to understand costs rather than prices if we are to improve value in our health care spending. But is their
approach on analyzing our costs an efficient method that can be applied throughout our health care system?

Kaplan and Porter propose that we abandon billing based largely on historical prices for itemized services and products. Instead they propose that we continue to focus on the patient as the unit of analysis, but that we should do it around the patient’s medical condition. As an example, they would ask how much does each cost factor contribute to the total cost, but not the price, of a total knee replacement?

When a hospital bills for services what we see are the prices, not the costs. Kaplan and Porter recommend a meticulous microanalysis to break the charges down to the hospital’s actual costs. However, when a hospital purchases supplies and services, the hospital’s costs are the prices they pay for those supplies and services which are certainly higher than the costs for those supplying those resources. Thus this distinction between price and cost can be quite blurred, in spite of their efforts to tease them out.

From the cost measurement process that they describe above, you can see that it requires an inordinate amount of microanalysis, using teams of clinicians and administrators. It is very labor intensive, yet would those costs be applied to the total cost of the given condition in a given patient? Would the total cost include the patient’s fraction of the liability insurance for the hospital? Or the patient’s fraction of the amortized building costs for the facility? Or the costs of the visitor parking lot for their families and friends to use? Or the costs of marketing to the community? You can see that fixed costs can be difficult to assign to specific patients, and marginal costs may be quite variable.

Further, how many medical conditions would need a separate analysis? Would a total knee replacement in a younger, healthy individual have the same itemized costs as the same procedure in a patient with multiple chronic disorders that would have to be monitored or managed during the admission? How many sub-classifications would you need for total knee replacement because of the varying status of each patient? Can patients really be categorized accurately enough to assign a specific package fee based on actual costs? Or would each patient have to undergo the laborious microanalysis of their use of supplies and services?

If you do not do such a microanalysis on each patient, then you still end up with an inequitable assignment of costs because of the variability of patients within the same clinical presentation category. By the time you define enough clinical presentations that take into consideration all of the variables, you have almost an encyclopedic list to choose from. Then would the total charge still represent the hospital’s actual costs plus margin in each and every case? Certainly the hospital’s various costs are not fixed in time but represent an ongoing dynamic. How often would you have to repeat these labor intensive studies to make sure that they were current and accurate?

The flaw in this approach is that we are trying to pay for health care by using market principles rather than approaching patients from a public service perspective. We are trying to assign specific complex costs and prices to single individuals with specific given medical conditions, like commodities in markets. This typifies our profoundly wasteful system of financing health care – especially the administrative waste.

There is a far better way. Pay hospitals based on global budgets, much like we do with police, fire, libraries and other public or quasi-public institutions. All reasonable costs are budgeted with appropriate adjustments for needs such as surge capacity and the provision of extraordinary services. Individuals receive appropriate services without regard to the actual costs of the specific services consumed by teach individual. Patients simply get what they need. Efficiencies are attained through the budgeting process. A large hospital in the United States requires hundreds of billing clerks and other personnel, whereas a globally budgeted hospital, as they have in Canada, requires very few billing personnel simply because the costs have been paid through a global budget.

Instead of using market principles with package prices for individuals based on meticulous cost analysis, we should dump the market nonsense and take advantage of the efficiency and equity of global budgeting of hospitals. That is really only possible if we get rid of our fragmented financing system and establish our own single payer national health program.

Kaplan and Porter’s misguided microanalysis of costs

Why Medical Bills Are a Mystery

By Robert S. Kaplan and Michael E. Porter
The New York Times, April 14, 2012

Rising health care costs are busting the federal budget as well as those of states, counties and municipalities. Policy makers and health care leaders have spent decades trying to figure out what to do about this.

Yet their solutions are failing because of a fundamental and largely unrecognized problem: We don’t know what it costs to deliver health care to individual patients, much less how those costs compare to the outcomes achieved.

Because health care charges and reimbursements have become disconnected from actual costs, some procedures are reimbursed very generously, while others are priced below their actual cost or not reimbursed at all. This leads many providers to expand into well-reimbursed procedures, like knee and hip replacements or high-end imaging, producing huge excess capacity for these at the same time that shortages persist in poorly reimbursed but critical services like primary and preventive care.

We are currently working with several health care organizations, including MD Anderson Cancer Center in Houston, Children’s Hospital Boston, Partners Healthcare in Boston and Schön Klinik in Germany, that are beginning to figure out how to measure costs. They use teams of clinicians and administrators to identify all the processes involved in care, from a patient’s first contact with a health care provider through his or her inpatient stay and outpatient follow-up care. The teams then identify the quantity and unit cost of each resource — clinical staff, equipment, supplies, devices and administrative support — used in each process and add these together to learn the total cost of a patient’s care.

Understanding costs could be the single most powerful lever to transform the value of health care.  This would give payers and providers the data they need to improve patient care, and to stop arbitrary cuts and counterproductive cost shifting.

http://www.nytimes.com/2012/04/15/opinion/sunday/why-medical-bills-are-a-mystery.html?_r=2

And…

The Big Idea: How to Solve the Cost Crisis in Health Care

By Robert S. Kaplan and Michael E. Porter
Harvard Business Review, September 2011

The Cost Measurement Process

1. Select the medical condition (including the associated complications and comorbidities).

2. Define the care delivery value chain (charts the principal activities involved in a patient’s care for a medical condition along with their locations).

3. Develop process maps of each activity in patient care delivery (include all the capacity-supplying resources – personnel, facilities, and equipment – involved at each process along the path; identify the consumable supplies such as medications, syringes, catheters, and bandages).

4. Obtain time estimates for each process (in the future, we expect providers will use electronic handheld, bar-code, and RFID devices to capture actual times).

5. Estimate the cost of supplying patient care resources (compensation for employees; depreciation or leasing of equipment, supplies, or other operating expenses; deducting time for teaching and research; identify support resources necessary to supply the primary resources providing patient care; allocate the costs of departments and activities that support the patient-facing work).

6. Estimate the capacity of each resource, and calculate the capacity cost rate (number of days that each employee actually works each year, number of hours per day that the employee is available for work, number of hours per workday used for nonpatient-related work, such as breaks, training, education, and administrative meetings; for equipment resources measure capacity by estimating the number of days per month and the number of hours per day that each piece of equipment can be used; factors such as peak load demands, surge capacity, and capacity acquired for future growth should be accounted for).

7. Calculate the total cost of patient care. (In the final step, the project team estimates the total cost of treating a patient by simply multiplying the capacity cost rates – including associated support costs – for each resource used in each patient process by the amounts of time the patient spent with the resource. Sum up all the costs across all the processes used during the patient’s complete cycle of care to produce the total cost of care for the patient.)

Reinventing Reimbursement

If we are to stop the escalation of total health care costs, the level of reimbursement must be reduced. But how this is done will have profound implications for the quality and supply of health care. Across-the-board cuts in reimbursement will jeopardize the quality of care and likely lead to severe rationing. Reductions that enable the quality of care to be maintained or improved need to be informed by accurate knowledge of the total costs required to achieve the desired outcomes when treating individual patients with a given medical condition.

The current system of reimbursement is disconnected from actual costs and outcomes and discourages providers and payors from introducing more cost-effective processes for treating patients. With today’s inadequate costing systems, reimbursement rates have often been based on historical charges. That approach has introduced massive cross subsidies that reimburse some services generously and pay far below costs for others, leading to excess supply for well-reimbursed services and inadequate delivery and innovation for poorly reimbursed ones.

Adjusting only the level of reimbursement, however, will not be enough. Any true health care reform will require abandoning the current complex fee-for-service payment schedule altogether. Instead, payors should introduce value-based reimbursement, such as bundled payments, that covers the full care cycle and includes care for complications and common comorbidities. Value-based reimbursement rewards providers who deliver the best overall care at the lowest cost and who minimize complications rather than create them. The lack of accurate cost data covering the full cycle of care for a patient has been the major barrier to adopting alternative reimbursement approaches, such as bundled reimbursement, that are more aligned with value.

We believe that our proposed improvements in cost measurement, coupled with better outcome measurement, will give third-party payors the confidence to introduce reimbursement methods that better reward value, reduce perverse incentives, and encourage provider innovation. As providers start to understand the total costs of treating patients over their complete cycle of care, they will also be able to contemplate innovative reimbursement approaches without fear of sacrificing their financial sustainability. Those that deliver desired health outcomes faster and more efficiently, without unnecessary services, and with proven, simpler treatment models will not be penalized by lower revenues.

(Robert S. Kaplan is a Baker Foundation Professor at Harvard Business School.)

(Michael E. Porter is the Bishop William Lawrence University Professor at Harvard. He is based at Harvard Business School.)

http://hbr.org/2011/09/how-to-solve-the-cost-crisis-in-health-care/ar/1

Comment: 

By Don McCanne, MD

Robert Kaplan and Michael Porter are correct when they say that we need to understand costs rather than prices if we are to improve value in our health care spending. But is their approach on analyzing our costs an efficient method that can be applied throughout our health care system?

Kaplan and Porter propose that we abandon billing based largely on historical prices for itemized services and products. Instead they propose that we continue to focus on the patient as the unit of analysis, but that we should do it around the patient’s medical condition. As an example, they would ask how much does each cost factor contribute to the total cost, but not the price, of a total knee replacement?

When a hospital bills for services what we see are the prices, not the costs. Kaplan and Porter recommend a meticulous microanalysis to break the charges down to the hospital’s actual costs. However, when a hospital purchases supplies and services, the hospital’s costs are the prices they pay for those supplies and services which are certainly higher than the costs for those supplying those resources. Thus this distinction between price and cost can be quite blurred, in spite of their efforts to tease them out.

From the cost measurement process that they describe above, you can see that it requires an inordinate amount of microanalysis, using teams of clinicians and administrators. It is very labor intensive, yet would those costs be applied to the total cost of the given condition in a given patient? Would the total cost include the patient’s fraction of the liability insurance for the hospital? Or the patient’s fraction of the amortized building costs for the facility? Or the costs of the visitor parking lot for their families and friends to use? Or the costs of marketing to the community? You can see that fixed costs can be difficult to assign to specific patients, and marginal costs may be quite variable.

Further, how many medical conditions would need a separate analysis? Would a total knee replacement in a younger, healthy individual have the same itemized costs as the same procedure in a patient with multiple chronic disorders that would have to be monitored or managed during the admission? How many sub-classifications would you need for total knee replacement because of the varying status of each patient? Can patients really be categorized accurately enough to assign a specific package fee based on actual costs? Or would each patient have to undergo the laborious microanalysis of their use of supplies and services?

If you do not do such a microanalysis on each patient, then you still end up with an inequitable assignment of costs because of the variability of patients within the same clinical presentation category. By the time you define enough clinical presentations that take into consideration all of the variables, you have almost an encyclopedic list to choose from. Then would the total charge still represent the hospital’s actual costs plus margin in each and every case? Certainly the hospital’s various costs are not fixed in time but represent an ongoing dynamic. How often would you have to repeat these labor intensive studies to make sure that they were current and accurate?

The flaw in this approach is that we are trying to pay for health care by using market principles rather than approaching patients from a public service perspective. We are trying to assign specific complex costs and prices to single individuals with specific given medical conditions, like commodities in markets. This typifies our profoundly wasteful system of financing health care – especially the administrative waste.

There is a far better way. Pay hospitals based on global budgets, much like we do with police, fire, libraries and other public or quasi-public institutions. All reasonable costs are budgeted with appropriate adjustments for needs such as surge capacity and the provision of extraordinary services. Individuals receive appropriate services without regard to the actual costs of the specific services consumed by teach individual. Patients simply get what they need. Efficiencies are attained through the budgeting process. A large hospital in the United States requires hundreds of billing clerks and other personnel, whereas a globally budgeted hospital, as they have in Canada, requires very few billing personnel simply because the costs have been paid through a global budget.

Instead of using market principles with package prices for individuals based on meticulous cost analysis, we should dump the market nonsense and take advantage of the efficiency and equity of global budgeting of hospitals. That is really only possible if we get rid of our fragmented financing system and establish our own single payer national health program.