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26 July 2016


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You guys should watch this if you want to talk about ERs.



walrus --

We have to get a handle on our medical costs and you are 100% right, we should certainly be using the "best bits" of others' systems when we redo ours.

Australia seems to be one of the few First World countries left that actually is run for the benefit of its own citizens.

Do not let that change.

When I think of all that we will have to do to "get back our country again" I wonder if we'll be able to do it, in the end. Not that it will be me doing it, it will be done by Americans who are kids today or not even born. What a terrible thing we are thrusting on them -- a mess we allowed to be made mostly without protest.

Anyway, good luck to the Australians on keeping the great things they've got.

Eric Newhill

Hi Steve,
It's probably a matter of perspective, emphasis and regional/corporate difference. The company I work for is national (international actually). We probably contract with you.

I don't exactly recall what I wrote. But with regards to 3), I believe I was referring to a pay for performance model as opposed to credentialing. The company I work for is a pioneer in analyzing risk models based on members' claims and determining the quality of care that has been provided. This would include gaps in care for chronic conditions, follow-up visits, various outcomes measures. Providers are reimbursed at a base rate. Higher quality relative to peers leads to higher reimbursement. Extremely low quality would lead to discontinuation of contract.

There are many good physicians that try very hard to work with us to keep costs down (as you note). So I don't mean to disparage the whole provider community. As you know, these trends take on a life of their own. It isn't always by design.

Yes, we pay for the knee arthroscopies. We've tried not too and we pretty much had a provider revolt on our hands.

I did study a few years ago concerning spinal surgeries. I was appalled by the poor outcomes (and the cost). Many members were far worse off than prior to surgery. We could see that analgesic/opiate prescriptions continues for years afterwards, suggesting a failure to relieve symptoms. Worse, direct evidence came from failed laminectomy syndrome, failure to fuse, etc. I was proud of that work because, based on it, we implemented much tighter parameters for approval of auth requests. We even went to full medical chart reviews for a period of time to make sure the surgeons knew we meant it. $millions were saved, but more importantly, a lot of people were spared inappropriate surgeries that could have ruined their lives.

Eric Newhill

Walrus, There is much to be admired and emulated in the Australian system. I would vote for its direct implementation in the US.

The private market ideologues would object as would the social justice rabble rousers. The latter b/c rich people could still get supplemental insurance they can't and thus they would proclaim that a genocidal war was being waged against them. Politician would respond by expanding public benefits to = the supplemental and we'd be back where we started, now with 30% of GDP going to healthcare.



Its kind of ridiculous to strawman this situation as "greedy hospitals and insurance companies!" when the law won't let anyone get turned away from an ER.

People need to stop using the ER as their primary care. Full stop.



lmbo a socialist finally finds something to complain about the cost of.

you're pretty dedicated to picking those nits, huh?


You are write about the misuse (not abuse) of E.R. The patients show up in ER because they can not find PCP (Primary Care Physicians) who take their insurance. This whole Obama Care Insurance issue, though better than before, leaves a HUGE gap where lots of low income people fall through. Using monetary disincentives to avoid healthcare contacts, prevents budget overruns but it leads to poor healthcare delivery. What would be even better than building these financial barriers, would be just to shoot all the excess population. I am sure you are not advocating that.
What is needed is a complete reorganization of healthcare.

As I had said before, one has to remove the "paper pushers" from the system. In us 30% (yes THIRTY procreant) of the healthcare budget is spent on administration. A country like The Netherlands does it with 3% and Belgium with 5% of the cost. They are 6-10 times (600% to 1000%) more efficient in their administration, if one wants to believe this. Or the other explanation is that (like the contractor business in the defense sector, of which I know nothing) by creating these huge side-streams, milking it becomes easier.

More US graduate needs to be educated and at a lower cost. There is no reason why educating a physician in US costs 200,000.00 $ for the graduate school and probably another 100k to 150k $ for undergraduate school. And all this while the same level of education (no Belgium (highest per capita number of patents), Switzerland, Sweden, The Netherlands, UK, ... are not inferior to the US education) costs only a fraction in the latter countries: range of 30k to 70k $.

US graduates can not AFFORD to choose for primary care as they have to repay a hundred of thousands of dollars in loans with continuous accruement of interest.

On top of that, there is now a "security tax" that is being leveed on the healthcare system, hidden in the administration cost and another boondoggle for defense contractors. Yes you heard it correctly, the defense contractors are now milking the healthcare system.

I know for a fact that a certain company BAH is implementing ambient logics, via the electronic medical record and soon RFID and magnetic strips, to determine which healthcare worker is having "anomalous behavior". For example whether a phlebotomist (drawer of blood) is somewhere that he should not be ... in order to "assure patient safety". This is being done, in light of prior attacks by healthcare workers in hospitals in UK (that were buried in mass media). Especially as large number of physicians in US are foreign medical graduates, in all likelihood, there was a predication that attacks, similar to the events in France and Belgium, would metastasis to the healthcare system as well.

This type of reactionary approach is antidemocratic, inefficient, backward and counterproductive. The solution for this problem is to have more AMERICAN physicians. I utilized the opportunity - that was created by misallocation of resources towards what the US government spends most of it's money on - for professional and personal advancement. It feels awkward to deny these opportunities to other IMG's but at the end of the day, avoiding a slippery slope towards fascism is more important.


If you want to pursue a "client centric" healthcare, you are on the right track. But please do not pretend that this type of healthcare is mirroring the mantra of Avicenna, Hippocrates, Meimonides... I was horrified to hear that in a certain healthcare system, they were talking about "Healthcare Customers", in stead of patients. If anyone ever uses that word in Europe (that know), he/she will be ostracized without any hesitation.

I understand that there might be some hypocrisy in making a distinction between "Healthcare Customer" and patient. But at the end of the day, when you start from "healthcare customer" as a milestone, you will end up somewhere down the gutter.

In U.S., there is a multi-speedlane healthcare system. Good luck if you are destitute.


Best way to arrange for reduction of the ER visits is to arrange for PERSONAL primary care physicians for all Americans (if not all inhabitants of U.S., legal or illegal). This is not some leftist fantasy but rather cost effective.
Drug-seekers in U.S. end up in ER each time with "Chest Pain". Believe you me, they know what to say and you know they are not completely truthful but at the end of the day, it is not appropriate to ignore the patient's complaint. They are willing to get poked, irradiated, remain fasting and for some instances even undergo surgery to get their Dialaudid High. The solution is not barring these people from care but redirecting financing of jails to rehabilitation centers. Profit motive will always remain their but it is better to put it towards a benign than a indifferent, if not malign, goal. If and when you have a longstanding relationship with your personal physician, he is able to influence your healthcare choices much better.


Although the essence of your statement is correct, stating that "everyone should get a PCP, in order to avoid unnecessary ER visits", is a more valid statement.


And one can stop paying for systems that are used to secure Lockheed Martin or Grumman, to protect hospitals and educate more caring local physicians with bonds to the same community they serve.


There are records kept: please check Propublica. But these records are skewed and easily manipulated.

Mark Gaughan

(Obamacare is a misnomer.) The PPACA was not written by the President. It was written by Congress and the Healthcare industry. Healthcare insurance reform was brought about by the continuous increase in premiums and costs. Single payer was a non-starter, but I think it's what many people want, and reformers had/have that in mind. " The idea behind PPACA was to short-circuit the drive towards a single payer system and to prevent a single payer system from ever emerging." You're right, but the folks pushing for reform want single payer. It did get hijacked along the way. Now with the PPACA many more people are insured. Costs have increased, but less so than what would be the case without the legislation.

Eric Newhill

Cynthia, Actually, insurance cannot just cut ER reimbursement. Negotiations with providers often highlight the downside of the competitive free market model. Cut too deep into a provider's pocket and they threaten to not take your members, which destroys the networks you need to maintain. They'll contract with the other insurers who, being competitive against each other, will offer a little more reimbursement. A bidding war starts amongst the insurance companies and soon the reimbursement is right up there again.

So we try to work with copays/deductibles to incentive members properly (though we may tweak provider reimbursement to reflect inappropriate ER treatment at least a little).

Insurance companies cannot collude to set a low fixed rate for ER or any other services. The DOJ would be right on us.

This is an example of how a national, single payer system ^could^ have a positive effective - i.e. here's what you get paid, take it or leave it - and one of the reasons the provider lobbies are so against single payer.

Eric Newhill

Stephen, I'm not making it up. I am in this data every day. We see the pattern very powerfully. Member enrolls, has an expensive (defined as $10k or more) claim or series of claims and then, when claims begin to taper off, they disenroll. Sometimes you see them re-enroll several months later, incur more expensive claims and then disenroll again. Repeat as needed.

And why wouldn't they? That is the rational choice if they can get away with it, which they can because the ACA is structured exactly to permit it. But that means they are using a private business like a free ATM card.

Eric Newhill

Mark - "Costs have increased, but less so than what would be the case without the legislation." How so? How have costs been held down by the ACA?

IMO, the most revolutionary aspect of the ACA in terms of impact is the removal of pre-existing conditions exclusions.

When the ACA was proposed I was skeptical that it would as advertised. A big feature was the notion that lots of young healthy people would sign up, incur very claims,and offset the expensive pre-existing condition members.

This made no sense to me. I usually work under the assumption that people are rational actors. You just need to know what it is they want/need. True, you can be dealing with an ideologue, and insane person or an incredibly selfless person, but generally, rational and self-interested is the best model. This is especially true when dealing with average Joes and Janes. We know what they need; to pay their bills and make ends meet. The cost of insurance, which they would be unlikely to utilize to any meaningful extent, far exceeds the cost of an occasional out of pocket doctor visit or the penalty at tax time for not having insurance. So why would they buy ACA? The ideologues in DC drank enough cool aid to think they would because it's what everyone wants. The economics didn't make sense to me. Fortunately the senior execs making the decision agreed with the rational actor model and as a result we went into the ACA market much more cautiously than some of our competitors. It turned out to be true. So the ACA brought in a bunch of very unhealthy people. The people who knew their medical claims would be in excess of their premium cost. So cost went up and premiums went up to cover the cost. The little start up companies selling ACA insurance have wiped out. That is the story.


It's a bit more complicated than that, Tyler. People with "Cadillac" plans and people on Medicaid and Medicare don't have any incentive to not use the ER as a primary care clinic. Then again, they don't deserve all the blame for this. There are not enough primary care physicians to take care of their minor or even their chronic, yet minor healthcare problems -- things like a diabetic with high blood sugar or or a CHF patient in fluid overlaid. This problem is made worse by the fact that most primary care physicians won't work after hours, holidays and weekends. Why do you think ERs are the busiest after 5pm, and on holidays and weekends?

My solution to this, at least in the short term, is to reimburse minor ailments in the ER at a lower rate. All medical ailments, from a simple rash to a major heart attack, are already coded for reimbursement purposes. Just divide these ailments into minor, major, and all else in between, and reimburse them accordingly. This would significantly bring down ER costs without compromising care.

In the meantime, we can work towards increasing the number of primary care physicians. But that gonna take time -- years, in fact -- which is why I recommend developing a more affordable way to treat primary care problems in the ER, knowing that this is a just a temporary fix.



You can blame drug-seekers coming into the ER to get their "dilaudid high" on the healthcare bureaucrats in Washington. First they made the mistake of making pain the "fifth vital sign." Then they came up with ridiculous idea to reimburse hospitals and other providers based on how well that treat pain. And no one can figure out why opioid addiction has reach epidemic proportions in the US! Connecting the dots could never be easier.

But nothing is gonna be done to correct this problem until the revolving door between the healthcare bureaucrats in Washington and the healthcare entrepreneurs in the private sector is shut down, for good. For instance, the company that came up with the patient satisfaction survey, which includes lots of pain management questions, lobbied to have their survey results tied to reimbursement. So doctors and nurses know that if they don't give drug- seekers the "dilaudid high" that they want and crave, they are likely to get a poor patient satisfaction survey, and thus, in turn, get a lower reimbursement from private insurers, as well as from Medicaid and Medicare.

Nevertheless, I still will argue that bureaucratic bloat is the biggest yet least talk about problem facing healthcare. And it's only gotten worse under ObamaCare. Prior to ObamaCare, there were roughly 10 back-office administrators for every doctor employed in the hospital. Now, thanks to ObamaCare, there are roughly 16 back-office administrators for every doctor employed in the hospital. This wouldn't 't be such a problem if somehow all these employees in the back office did something to improve quality of care or reduce hospital readmissions. But that's not the case. Far from it. Quality of care has only gone down and hospital readmissions have only gone up since the passage of ObamaCare.

No doubt that ObamaCare has become a jobs program for the US. Which is largely why the Obama Administration doesn't want to do anything to reduce all the bureaucratic bloat plaguing healthcare. If they do, US employment numbers would drop, making the president's record on employment look worse than it already is. But if the Obama Administration wants to be honest with the American people, they would openly admit that all of this bureaucratic bloat in healthcare is putting a drain on the rest of the economy.

Simply put, no nation can have a vibrant, sustainable economy and compete successfully in the global market when healthcare is parasitically consuming an ever-increasing share of its GDP. The Obama Administration needs to come clean on this, even if it means death to ObamaCare.


You are assuming that providers wield more power than insurers do. I don't believe this is the case, Eric. There has been a lot more consolidation the insurance industry than in the hospital industry. No doubt that this has given insurers the upper-hand over providers. But even if private insurers don't wield enough power to cut ER reimbursements, or any reimbursements for that matter, the federal government can.

It's worth noting that nearly half of all healthcare dollars now come from the federal government. Maybe you're unaware, but 1 in 3 Californians is now on Medicaid. When all 50 states get on board to expand Medicare, and with Hillary as president this is likely to happen, 1 in 3 Americans will be on Medicaid. This is why Medicaid has become a cash cow for insurers.

As you mentioned below, insurers are losing money on managing ObamaCare plans, which, BTW, is somewhat irrelevant given that the number of people on ObamaCare, especially the ones that are subsidy free, is a drop in the bucket compared to the number of people on Medicaid. However, they are making up for these losses, minor though they are, by making a lot of money on managing Medicaid plans. Economy of scale can work wonders on your profit margins.

Speaking of profit margins, hospitals are known for having razor thin profit margins. Much of this is due to their high labor costs. But as I mentioned before, an increasingly higher portion of their labor costs is due to bureaucratic bloat. If hospitals would cut the number of beancounters and paper-pushers in the back office, their profit margins would fatten up in no time, and without compromising care one bit. Then they will have enough padding to withstand ER reimbursement cuts.

Needless to say, though, hospitals can't reduce bureaucratic bloat until we get healthcare reform that discourages bureaucratic bloat. But we can't do that until we shut down the revolving door healthcare bureaucrats in Washington and healthcare bureaucrats in the hospital industry. Hopefully a Trump presidency can do that.

Mark Logan


As an employer I dug deeply into this during the Obamacare debates. Having eighteen months helped a lot...ahem...but I did develop a "starter kit" for the the genuinely curious.

First recommendation: "Dirty Rotten Strategies"

It's about problem solving in general but used the "mess" of our system as their primary example to differentiate between "messes" which require comprehensive solutions from "problems" which only require fixes. They even issued a youtube for the non-book readers. It is unwise to approach the topic without determining which we are dealing with.

Second:"Best Care Anywhere" by Longman

This is about the VA system and is an examination of healthcare efficiency. Can't get far without addressing that too.

Third and last in the order should be IMO the PBS series "Sick Around The World"

A comparative study of our system with five others.

Designed to set the stage for a realization of the reason nobody else has a "VA", among other things. Comprehensive coverage of all, whether the evil NHS of the UK, the socialistical Canadian, the private insurance based German, or the mish-mash of Singapore and Japan and France eliminates the need for separate facilities for vets.

Allen Thomson

This is perhaps not totally on topic, but have any noticeable religious entities expressed an opinion on how health care should or shouldn't be handled these days? Any of the various varieties of Judaism, Christianity, Islam, Hinduism, Buddhism, etc.?


As I pointed out, the costs could be cut quite a bit if they simply used existing rural clinics and just made them more accessible to vets. Would have to get Congress to stop shutting them down. Helped set up the trauma system at a critical access hospital so I have some familiarity with the costs, issues and politics.



You are right about the glut of administrators and case managers and social workers and home health care liaisons... As I had mentioned before, 30% of the total US health care budget is used for unproductive administrative work.

Regarding pain: the CMS has realized that pain scoring is leading to abuse and has removed it from the reimbursement criteria.


In principal you are right. Insurance companies have much more power than most providers, especially the smaller group practices. The consolidation leads to lack of choice and not necessarily to better care, on the contrary.

You are also right about paper pushers being leaches of the system. The system would be massively more efficient, if they would eliminate those bureaucrats through a reconversion plan that allows the same people to be productive in actual bedside patient care. This will reduce, though not eliminate, the resistance of this "Paperologist Class", by ensuring continuation of their income.

But realize that for the time being the individual hospitals will loose money, if they don't have these leaches that will bring in the money. For example a "coding specialist" will make sure that you code Sepsis secondary to UTI as opposed to Urosepsis. Both mean the same in medicine however for the first one, you get 2 days (I think) of hospital stay reimbursed, while for the latter you will get exactly ZERO. There is no logic in that.

Also arranging for wage caps is important. There is no reason for a CEO to earn 3 million $ a year and pay himself another 15 million bonus in a "non-for profit" hospital. And I am talking about an actual example. His contribution to growth of the hospital and patient care is limited. For example, by introducing electronic medical records, typists could be eliminated. Now individual physician and allied health care workers do the work of those scribes. However the former are not getting extra pay while they save million for the non-profit health system, that mostly flows into the pocket of the board of directors.

This has nothing to do with Adam Smith's efficiency of capitalism but rather resembles the post-USSR crony capitalism.

John Minehan

This is an old Thread, but very interesting.

Most hospitals and systems have found ways around EMTALA at least sufficient to ensure they are not swamped.

However, one problem is that PCP, whose practice model is based on 6-10 patient encounters/hour at a Level 3 RBRVS or higher can't really take on many Medicaid patients and often don't par with it.

So expanding Medicaid doesn't really do that much to get people "Medical Homes."

The ACA 'Exchange" Plans (generally "Bronze Plans") are high deductible plans generally built around narrow-network Medicaid Managed Care Plans with a high deductible and co-pays slapped on. And, of course, there is no provision for HSAs. It's stupid plan-design . . . but most people opposed repealing this Shanda because they are sure the Trump Administration would come up wit something worse (if that is possible).

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