Competitive Bidding for Medical Services

I recently received this email from a concerned reader:

Anne:
I would be interested in hearing how other office are handling the following situation.

We are constantly getting requests from 3rd party carriers who are working with the insurance carriers to renegotiate fees. We have our own MRI and constantly get asked to sign contracts. Our providers are feeling that the insurance companies are sending patients to the lowest bidder. I would be curious to hear how other practices are handling this.

Kathy
Practice Admin

Thanks for your email, Kathy. On the face of it, bidding for the lowest costing service sounds like a good plan. In a capitalist market, the company that offers the best price should win out. Legislators love the simplicity of this argument when it comes to something like Medicare, because it makes them look like they are doing something for the consumer.

Unfortunately, I don't think medicine is helped by this practice. First of all, to streamline a system of healthcare to this approach costs money, and the bureaucracy it creates isn't cheap. Also, once it's determined that someone offers a service for less, the patient is usually not given any other choice.

As with many things, cheaper isn't necessarily better when it comes to healthcare. There are often legitimate reasons for increased cost, and also for letting the marketplace determine the value of something, not some bureaucrat trying to save a dollar. The favoritism that causes some services to be more lucrative is a form of rot, potentially causing other less profitable procedures to be eliminated or harder to receive.

If insurance companies in the U.S. have proven anything conclusive, it's that money decides healthcare policy, even under the guise of saving it. In the end, competitive bidding is a misnomer. It may simplify things, but it doesn't make them better.

But that's just my opinion. I would be interested to hear what other readers have to say. As always, dissenting points of view are encouraged.

In Response

I got a good response to my last post about people going overseas for medical procedures because it costs less. If you don't mind, I'd like to respond to some of the comments.

"All of your articles have been written and posted by others."

"Sharing your thoughts is a good idea and marvelous use of blogging, but my curious nature wonders why you are doing this."

These were comments from two different people, but I think they both relate to my purpose in blogging. I do a lot of online research, and I wanted to use this as a forum to share information with not only my fellow medical professionals, but anyone who cares about the practice of modern medicine. I often don't talk to my co-workers about these things to keep the peace, but also because I tend to keep my private concerns private.

Because I deal in facts and usually get my information elsewhere, it's logical that I would not only cite my sources, but reprint some of their material. If someone can say it better than me, why not?

The second commenter went on to say:

"...like you, (I) entered healthcare management (twenty years in hospital administration, consulting and eight managing medical practices)to help based on my non clinical skills. I worked largely in innercity hospitals and then transitioned to medical practice management. There I became more jaundiced with the attitudes of specialty physicians. Behind the scenes the focus of a surprising number of doctors was on paying patients, although periodically altrusim did shine through. I had to look carefully for the quiet ones who took care of patients and did not bluster at the closed door business meetings. When things got tough they would speak up, but only when really pushed. Rhetorically, I wonder why organized medicine, and our lofty management societies and associations don't focus more on the caring side, the professional side, the hippocratic side."

Here again, someone says it better than I can. Another reader makes a good point based on experience:

"Why would H/care be exempt from the global marketplace? Health care services are a product that is consumed by consumers (patients). Accordingly, patients will shop for services. Consumerism in health care has been a long time coming. For instance, my family went to Colombia to get dental work done for a fraction of what it would cost here, and we managed to add in a vacation. Now the one thing to consider, is what if there are complications, is the company going to fly the employee back to resolve the complication? (Probably not)."

Actually, I don't blame the patients for taking advantage of better deals in other countries. Your trip to Colombia sounds like a marvelous combination of business and pleasure, although I wonder if your vacation wasn't affected by the dental work! Still, you ask a great question at the end, and while I'd suppose it depends on the company and the agreement worked out in advance, another reader makes this excellent point:

"You got it right when you said 'COMPLICATIONS'. Try suing the doctor overseas and see how far you get. The malpractice piece is a large part of our health care dollar."

Then there was this comment by Lifeline Medical Associates President/CEO Jack Feltz that eloquently summed up the frustrations he experiences heading the largest provider of women's healthcare in New Jersey:

"One of the biggest wastes of resources is practicing defensive medicine because of the medical liability crisis and lack of meaningful tort reform in New Jersey and elsewhere. Physicians, I believe tend to order more and more tests because they are frightened not to. If there is a bad outcome you can bet there will be an attorney and expert to say they should have ordered every test imaginable. This is tragic, making health care unaffordable. I would rather see these wasted dollars go towards cures for breast cancer, immunizing poor children, improving care and keeping healthcare in the hands of expert doctors and nurses in the U.S.A."

I think you make an excellent point, Jack (may I call you "Jack?"). If only more CEO's had your sense of compassion. I often forget the legal part of the equation because I am so frequently enmeshed in battles with insurance carriers. Or to again quote yet another reader who says it better than I can:

"Insurance carriers are problematic, and don't pay or delay paying claims, and then don't pay them according to the appropriate fee schedule. This means patients get billed eventually for services that should have been covered. Unhappy patients complain to employers about coverage. Employers decide to go elsewhere. This doesn't reflect on American physicians, it reflects on American insurance carriers. "

Exactly. Personally, I think the solution to our healthcare crisis will have to combine tort reform with insurance reform. Outsourcing illness is a symptom of a diseased system. In the end, our political representatives will have to summon the will to play doctor and cure this problem. As I noted in my previous post, their inaction on this issue is deadly.

Self Diagnosis by Phone?

I was reading the online journal at MedGadget.com, when I came across an article entitled "101 Things to Do with a Mobile Phone in Healthcare." I love my cell phone, but I wound up feeling a bit nervous.

The article detailed the growing phenomena of patients diagnosing themselves:

"When sites offering medical advice first appeared on the World Wide Web few GPs believed that, within a decade, they would encounter patients who used the Internet to become specialists in a particular ailment. Before the arrival of the 'informed patient' the GP was expected to provide a diagnosis, then recommend a course of treatment. Today many patients believe they already have a diagnosis and merely wish to have it confirmed by a series of tests. The question is no longer 'Doctor what is wrong with me?' but 'Doctor when can my treatment begin?' Mobile and wireless ehealth will enhance and broaden the scope of this type of self diagnosis. "

They go on to mention the growing number of companies such as Intelligent Medical Systems and Xenetec, and the credibility their experienced clinicians are giving to the products they offer. The report they cite believes this will create "peer pressure" in the industry, causing healthcare professionals to "encourage the automation of clinical processes."

This reminds me of the old saying, "cutting off your nose to spite your face." To keep up with the Joneses, we in the healthcare field are going to surrender our work to machines? I suppose this would be an improvement in the sense that at least they wouldn't envy one another.

I found this sentence to be particularly chilling:
"Companies such as Card Guard and Vitaphone are offering suites of wireless ehealth applications - which include blood pressure, heart rate and blood glucose monitoring - to patients, with or without the support of a conventional healthcare provider."

Of course, I hope technology helps people to take better care of themselves. While some patients who read up on their illnesses online can be difficult, many use what they've learned to help their doctor figure out what's wrong. It would be foolish to condemn technology that demystifies healthcare and empowers the patient.

However, I think it is very dangerous to convince people that they know how to treat their illnesses without the assistance of a medical professional. It's one thing to offer a tool to aid a diagnosis, and quite another to push a product to replace a rigorously trained professional.