The Blog

Define 'Waste, Fraud, and Abuse,' Mr. President

It would be helpful to know which programs would be cut under Obamacare.

12:00 AM, Sep 30, 2009 • By STANLEY GOLDFARB
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The president vows to pay for health care reform in large part by rooting out WFA (waste, fraud, and abuse) in Medicare and then in the rest of the health care system. It would be helpful for him to tell us what he thinks is wasteful and abusive.

Everyone agrees that our health care system is costly and quite a bit more costly than any other system on the planet. There is much disagreement about whether the costs are justified by the quality and access that our system affords Americans. The arguments about these latter two parameters are often fierce and often ill-informed. There does seem to be a great deal of dissatisfaction with our health care system by many, but not necessarily their own health care. This suggests that ideology rather than actual experience may govern many of the responses.

Some feel that profits, or excess revenue over expenses in the not-for-profit world, are unjustified on moral grounds when one is dealing with health. Some feel that the moral hazard associated with our current employer-based health insurance system is a culprit that undermines individual responsibility and contributes to high utilization. Some, mostly non-practicing physicians, who are "policy experts" feel that waste is rampant and that reform is achievable if only we would industrialize our health care practices like Toyota has done for the Prius. They tend to seek care at the most expensive academic medical centers that they can find. Just as the public has requested that Congress adopt the "public option" as their insurance plan, so should the health care policy experts who extol it be expected to "walk the walk" as well.

We do have high quality health care in America, and mortality measures that are used to denigrate our health care system are fatally flawed as surrogates for health care quality. We do have wide access to care and in most surveys, as Richard Cooper, a health care economist has pointed out, more health care means better quality health care. Polls by such organizations as the Kaiser Family Foundation show that Americans are as satisfied with their health care system as any citizens of any country.

Our system is expensive because of the very wide access to care and the high prices of care in this country. What has been called "waste and abuse"(two parts of the iconic but never repaired problem of "waste, fraud, and abuse") is actually another term for the wide access to technology and advanced care that Americans have come to expect from their encounters with the health care system. Certainly "fraud" should be eliminated. Medicare does a very poor job of this as has been well documented. Its low administrative costs are partly the result of its meager efforts at detecting fraud. However, one person's "waste and abuse" is another's piece of mind because an MRI scan or a CT scan has definitively ruled out a tumor when it was an unlikely but possible diagnosis and could simply have been followed along for several months to observe the late outcome.

What other "waste and abuse" are we talking about? The same people who have told the president that we should strongly consider the patient's age in any decision about the application of expensive technologies to their care are the ones who believe that "waste and abuse" represent the applications of expensive technologies. Take one example of the difference between the U.S. and Canada in what is generally agreed to be the most expensive component of healthcare: time spent in the hospital. The average length of hospital stays in Canada is about 20 percent longer than in the United States. The reason that the cost of a cardiac bypass procedure in Canada, for example, is nearly twice that of one in the United States is not waste and abuse, it is a higher price. We do not waste time in the United States keeping patients in the hospital.

Why is the price so much higher here and what do Americans get for the higher price? They receive greater access to technologically advanced care without a prolonged wait for that access. To have that access to advanced care, technology must diffuse widely in the community so that local hospitals in the U.S. perform the procedures that only specialized hospitals in Canada are able to perform. For hospitals to afford the highly technological care, they must earn enough to afford the costly equipment and maintenance contracts as well as the technologically adept staff to use the equipment. So what Americans get for the higher prices they pay for health care is the possibility of accessing high tech care at community hospitals as well as at large academic medical centers.

Why are prices so high at academic health centers? These institutions use the proceeds from their clinical activities to underwrite medical education costs and research activities. The latter are very costly but have obviously yielded enormous benefits to the U.S. Also, the academic medical centers have enormous malpractice insurance costs as well as the burden of caring for the uninsured and the poorest segments of the population.

The next question is whether this type of access is wasteful? Sure it is, unless you are the one that needs it. The touted clinical effectiveness research initiative found in both HR3200 and the "America's Healthy Future Act of 2009", better known as the Baucus bill, will aim to identify who exactly might benefit from which care. But the likelihood that each individual case will fit into a model system determined by assessment of the information in large computer data bases is pretty slim. Worth doing no doubt, but believing that it will dramatically lower health care costs is an example of hope overtaking reality.

Can we lower the cost of health care by 50 percent and achieve the type of care found in Canada, for example? Sure we can. All we need to do is close down all those cardiac surgery programs and community cancer centers that have sprung up around every large city and consolidate organ transplant programs and complex surgeries requiring enormously expensive surgical robots to a few hospitals in each city. We also should close down physician-owned, free-standing radiologic units that allow physicians to refer patients to their own facilities. Also, prevent self-referral to specialists without a primary care physician approval and penalize the primary if he sends too many patients to specialists. Put physicians and hospitals on a strict budget and do not allow them to provide any non-emergent care if the budget is exceeded towards the end of the fiscal year.

Are there less draconian ways to cut health care spending? Perhaps, but the draconian ones will work best. Is that what we want?

Stanley Goldfarb MD is associate dean of clinical education at the University of Pennsylvania School of Medicine and a nephrologist.