The Value-Based Fantasy

Thirty-five-years ago, we wrote our book, Modern Medicine: What You’re Dying to Know. We discussed the five reasons, one in each chapter, why medical care costs too much and then a sixth chapter on what to do about it. Even then, we encouraged people to contact their legislators and demand their legislators stop the raping of healthcare by vested interests. We were a little ahead of our time because people wondered why we wrote such a book. Insurance premiums were affordable (around $300 a month) and most employers could afford to pay the premiums, so nobody was terribly concerned about the cost of healthcare at that time, but we could see the handwriting on the wall.

Recently, Elizabeth Rosenthal, in An American Sickness, said essentially the same thing. Our legislators have failed to fix the problem. The only way for needed change to be brought about is for consumers to hold their legislators responsible for the dysfunctional healthcare system.

In the past quarter century, the American medical system has stopped focusing on health or even science. Instead, it attends more or less single-mindedly to its own profits….The current market for healthcare just doesn't deliver. It is deeply, perhaps fatally, flawed.

Introduction to An American Sickness

There are indeed many causes and solutions, but I believe most are fake causes and solutions to cutting medical costs.

Kevin Pho recently interviewed attorney Jaimie Cavanhaugh on KevinMD. She argues against Certificate of Need (CON) laws, as do others. They say that these laws increase price and stifle competition. New York and California don’t have these laws. In fairness, these laws were originally made to decrease duplication of services and were originally intended to keep a lid on healthcare spending. We have had these laws in North Dakota, but I believe that the main criticism for us is that they are not enforced. So, what I’ve seen in North Dakota is loads of unnecessary duplication, and hence unnecessary healthcare expense.

In Modern Medicine, the first chapter is "Big Business Medicine." We devote significant time to unnecessary duplication of services. In North Dakota, a new medical school has been recently built for $100 million. The old one was a very nice building which had been occupied by the medical school for about 10 years.The old building was structurally sound. For some reason, our state legislators were glad to fork over the money for new medical school building that wasn't needed.

In North Dakota, we have many small communities with perfectly good hospitals. However, there are no doctors in many of them. But the communities have bought the notion that to keep their hospitals and their communities alive, they need to build new $60 million hospitals. Perhaps they think a new hospital will attract a doctor. To my mind, these are acts of desperation. North Dakota has difficulty attracting doctors to rural areas. I've been told one reason is that doctors no longer want to practice in rural communities where they are essentially on 24/7.

One of these new hospitals was built 100 yards north of a hospital which was new in 1980. The hospital built in 1980 was structurally sound and still relatively new with ample room for additions. The question becomes who ultimately pays for these hospitals. The answer is your taxes.

This increasing cost is especially true when a large hospital system buys a smaller hospital. Sometimes the buying hospital gets a very good deal like paying a dollar for a community hospital. There's this public relations hype every time a hospital changes hands that this will save money. In reality, when the hospital changes hands, the public pays more for their healthcare so the purchasing hospital can recover their purchase price.

I believe that if the CON organizations where run by people who opposed the duplication of costs and profiteering of large hospital organizations, the CONs could function as they were designed to function. But because they seem to not be functioning, I would say at this time they are at best useless.

The overriding principle in Modern Medicine is that providing the best care at the right time for the right reason and the right cost yields the best results for the most people, while withholding care to make a profit is not only more costly in the long run, but results in the worst care. Denying access to care should not be our principle means of cost control. We need to and can do better than that.

The second point of Modern Medicine is that the high cost of insurance and medical care have occurred for reasons which can be reversed. Medicare Advantage (MA) plans are a good place to start. This program grew out of a 1997 plan to “privatize” Medicare. MA plans are horribly expensive and horribly negligent in the care they provide.

So, what has happened to medical care in the last 50 years? Why has it gone from affordable and reasonable to unaffordable and unreasonable? In 1969, I was hospitalized for five days with a broken ankle. Surgery was $325 and the hospital bill was $600. Today, of course, a bill would be much greater and there would be no hospital time.

I watched Bill Maher a few days ago and he interviewed two professors. At Yale University, there are approximately 5000 students and 3500 administrators. At Stanford there are 10,800 administrators. Bill Maher asked the very important question what do all those administrators do? The professors had a surprising, at least to me, response. They said that the whole world is changing and that now the students are considered to be consumers. These professors said students primarily want to have sex, party, drink alcohol, and consume drugs.

These professors said administrators were there to help the students get what they wanted. When I went to college 50 years ago, it was affordable. Tuition was $250 for a semester and campus room and board was $60 a month. I recently looked at going back to college for another degree and was looking at $700 a credit, so for three credits, that's $2100 a course. College has gone from affordable to unaffordable just like healthcare has gone from affordable to unaffordable. But no one seems to notice the increasing number of administrators.

One of the big reasons for the excessive cost of healthcare is the 3200 percent increase in healthcare administrators over the last 40 years. In this same time period, physicians have increased by 100 percent. In other words, there are twice as many physicians as they were 40 years ago, but 32 times the number of administrators. To make matters worse, the University of North Dakota has a program to make more administrators available to more hospitals in rural North Dakota, hospitals that often have no doctors.

Yes, another problem with hospital administrators is the elevation to the God-like title of “healthcare leaders.” Commensurate with the deity-like environment for them is the salary. It’s anywhere from 1,000,000 to 20,000,000 per year. The excuse is that the pay must be competitive. That healthcare costs are skyrocketing and people are being denied care doesn't enter into their equation.

Then there's also all of the federal regulators who retire from government and take lucrative jobs with Big Pharma when they leave their government positions.

The Medicare Patient Advisory Committee (MedPac) is an “independent” 17-member group lead by PhD Michael Chernew of Harvard medical school. MedPac “advises” the legislators about MA plans each year. He is happy to report that MA is very successful at providing less care for more money. How arrogant can you get?

Now, to make matters worse, the government has now passed Dr. Oz’s eight-point plan to increase MA spending by more than 25 billion in 2026. So rather than abolishing MA plans and saving $88 billion per year which could fund Medicare. Dr. Oz is adding $25 billion so the cost for MA plans increases to $112 billion per year.

Traditional medicare provides more and better care for less money with much better patient and provider satisfaction, but Medicare is being punished for doing a good job. Unfortunately, this kind of stupidity is what we have come to expect from our government. The fact that Dr. Oz and probably many legislators own stock in MA companies should raise a red flag to legislators and consumers.

Dr. Oz promised to identify and eliminate fraud, waste and abuse, which is the government’s one-note samba. During his confirmation hearings, Dr. Oz promised scrutiny of the Medicare Advantage program amid allegations of widespread fraud and concerns about MA sales and brokers. What happened to Dr. Oz's confirmation promises?

As is so often the case, especially in parlance from Washington DC, the thing is named exactly what it is not. For example, MA plans would be more appropriately named Medicare Disadvantage. So, PR types name something exactly the opposite of what it really is and no one seems to notice.

Newspapers every day pound out headlines that providers don’t know what they’re doing or worse, intentionally scheme to defraud the government healthcare programs. Federal and state governments assume that if they could just get us to behave, the cost of patient care would decrease, their profits would increase, and we could all live happily ever after. The insinuation here is that the providers need to be sufficiently beaten up or threatened in order to behave themselves. Belligerance does not solve healthcare problems.

Then there's this fantasy that somehow Medicare can define the emperor’s newest clothing, value-based care. We have a lot of people, including the American Medical Association (AMA) espousing value-based care as if we’ve never had that before. Value-based care is promoted as so much better than fee-for-service care. The implication here is that physicians can’t wait to charge for a service not rendered. So, with the so-called value-based care, people in Washington DC, at the Centers for Medicaid and Medicare Services (CMS) decide whether the care rendered has any value or not.

There are many problems with the definition of the term “value.” In the first place, it’s extremely subjective and means something different from person to person. So, the folks at CMS had a rather daunting task—trying to measure the unmeasurable. But that didn’t stop CMS from coming up with a definition that suited their new attempts go decrease costs. So CMS has come up with some arbitrary ideas and put them into practice. Again, the public relations stunt of calling something it is not and no one notices.

According to Dr. google:

“value- based care is a healthcare delivery model that prioritizes the quality of care, patient outcomes, and patient experience over the quantity of services provided. It’s shifts the focus from simply treating illnesses to promoting overall preventative care and addressing social determinants of health. Providers are incentivized to deliver high-quality care often through payment models that reward them for achieving specific performance and quality measures.”

My take on this is that there have always been doctors who wanted to provide value to their care. There have always been doctors who didn’t care about providing value to their care. I doubt that there is anything that can be done to get those who don’t care to care. I would say thank goodness most doctors just want to do the right thing by their patients. And that is probably the best definition of value-based care.

I am required to fill out a relatively hostile provider and patient EMR form. The form was so incredibly difficult it required 90 percent of the patient’s visit to complete. The end result was that the care that was provided was quite different from the care that the patient needed or what they actually got, but the form looked nice and I’m sure looked great to CMS as excellent value-based care.

The fact that value based care is based on a lot on vaccinations, blood pressure measurement, blood sugar levels, cholesterol levels, statin indoctrination, vaccinations and vaccination indoctrination, depression, measurement, and anti-depressants speaks to the incestuous relationship between Big Pharma and the federal government. In other words, we have a federal government carrying buckets of water for big Pharma. And that is considered to be value-based care.

Let’s look at some of the older measurements of value-based care in the hospital. For years we were supposed to not have hospital re-admissions and not have hospital-based infections. These conditions are actually somewhat measurable and the carrot and stick actually make some kind of common sense. But let’s look at re-admissions. In my experience, every readmission goes with the hospital diagnosis and not with the patient. There are ways to get around this. For example, if you re-admit the patient to a different hospital, it is not listed as a readmission. Years ago, I knew of a patient who had her ureter ligated at one hospital. It was re-implanted in another hospital and she died in the third hospital so the sequence of this thread was completely lost.

The other way to evade capture on this situation is to re-admit the patient with a different diagnosis. Remember, there is nobody on the receiving end who actually looks at any of these forms to verify what actually happened. This is all done by a machine.

The other way this “value-based” care could backfire is by misdiagnosing pneumonia. Often, we know that a patient is sick but it’s a little bit harder to understand exactly how they’re sick and sometimes a simple pneumonia is hard to diagnose. If we admit the patient to the hospital without a diagnosis of pneumonia, but add it during the hospital stay, it looks like the patient has hospital-acquired pneumonia, and therefore the provider would be punished for something that shouldn’t have been punishable. But you can’t argue with insurance companies, CMS, or their computers, about their flawed information. So the quest to look for the holy grail, value-based medicine, is fraught with problems which the people receiving the information are blissfully oblivious.

Then we have United Health, which of course has been in the news a lot lately because they deny approximately 30 percent of all claims without reading them. Providers are not supposed to use AI and providers are not supposed to submit claims that are the fruit of AI. On the other hand, we have Dr. Oz telling us that AI is the best thing since sliced bread. We have the president of United Health, explaining that all they’re trying to do is to make sure that people get the very best care possible and that they don’t spend any money on care that has no value. Of course, they have no real notion of what value is and do not verify their decisions by confirming with the patient that they actually received the care under question.

In the end, value should be what benefits the patient. There are a lot of people who get frail as they get sick and get older. Genuine value-based care, the kind of care most of us have always provided, involves seeing those people on a regular basis, monitoring their seven or eight illnesses, allowing them to stay in their homes, plant their gardens, mow their grass, do their cooking, and clean their houses. Sometimes that means seeing the patient every month.

In my experience, CMS, whether it’s Medicare or Medicaid, doesn’t like those visits. They consider monthly visits too many and don’t like paying for them. What they don’t understand is that these visits can keep dozens of people out of the nursing home. In North Dakota, nursing homes cost $15,000 a month so that if you have 10 patients that you keep out of the nursing home, that saves Medicaid $150,000 a month. If you have 20 patients that you keep out of nursing homes, that saves the Medicaid $300,000 a month. Nevertheless, Medicaid whines about paying for the $2000 or $4000 a month that saves them $300,000 a month. These are some of the problems and benefits that are beyond the understanding of the people yakking about value-based medicine.

In Modern Medicine, we have a chapter on the nursing shortage. Prior to the promotion of primary care nursing, there was a division of labor on a hospital floor. The RNs in the LPNs would be responsible for giving medication’s and writing in charts. The actual physical care was provided by what we used to call aids and orderlies. Primary care nursing created a tremendous shortage of nurses because rather than one RN and one LPN being responsible for the care of 45 or 50 patients, we had one RN being responsible for five or six patients. With the new job description of primary care nursing, nurses did everything, including bus food trays, empty bed pans, and answer telephones.

So, overnight a remarkable nursing shortage was created. There were many obvious consequences. With a shortage of nurses, salaries went through the roof, as each hospital was competing vigorously for nursing staff.

There were many other consequences of the artificially created nursing shortage, including the development of locum’s nursing. That is another business that siphons hundreds of thousands of dollars out of the hospital budget every year. The locum’s business gets paid $100 an hour for an LPN while the LPN probably gets $50 an hour.

Recently, one of the nursing leaders presented her case to our national legislators, requesting a ratio of one nurse to four or five patients. Our legislators unfortunately bit on this because they don’t understand the whole picture. The healthcare budget is already overheated. The only thing that requiring a nursing ratio of four or five to one will do is heat up our nursing crisis even more than it already is. The solution offered by your legislators is as effective as pouring gasoline on a burning house.

In summary, there is much that can be done to significantly decrease the cost of medical care, to make it affordable for everybody, and to provide everybody with the level of care that they need and want. I’ve talked about some of the drains on the healthcare budget that have absolutely nothing to do with medical care. For example, when it comes to big business, the owners of large healthcare companies such as United Health syphon billions of dollars every year out of the healthcare budget. Federal government is little or no help and often makes things worse. With MA plans, a stroke of the President’s pen could end MA plans and stop the drain of $112 billion out of the budget every year.

We could actually seriously look at the incestuous relationships between Big Pharma and big government. That is something I believe that RFK, Jr will do something about. It is very much needed, and long overdue. Bancel’s salary of $398 million is excessive beyond words and is paid for from the federal government in terms of healthcare costs and tax dollars.

Every CEO who makes $20 million a year also syphons 19 ½ million dollars out of the healthcare budget. The proliferation of administrators syphons billions of dollars out of the healthcare budget. The complicated EMRs also syphon billions of dollars out of the healthcare budget every year. Locum’s nurses syphon billions of dollars out of the healthcare budget every year .

Every single one of these problems is solvable. Unfortunately, we would need to have our state and federal legislators actually want to address the problems. I recently sent four letters about MA plans to my state representatives, Senator Hoeven, Senator Cramer, Representative Fedorchak, and one to DOGE talking about the problems that MA plans create for healthcare providers and especially for consumers.

I’ve heard nothing back from Representative Fedorchak and nothing from DOGE. Senator Cramer sent me an AI response promoting the wonderful benefits of MA and completely ignoring the $112 billion debt created every year and the very bad patient services it provides. I had a similar AI response generated letter from Senator Hoven lauding the wonders of MA plans. Senator Hoeven said by AI that he was so happy to be one of the 60 senators who voted to renew MA again this year. In any case, I am delighted to hear that 40 of the senators did not vote for increasing funding to the MA plans.

The bad news is that none of these remedies is likely to happen soon. And once again, finally, we cannot balance our healthcare budget on the backs of the public or on the back of access to medical care. All of the cost remedies can cut fat, not meat or bone, from the healthcare budget. But as Senator John Kennedy said, when you cut fat, pigs squeal...and there will be much squealing when we start. It's time to get started cutting the horrendous cost of medical care in this country in ways that don’t hurt providers or patients.