Is This What You REALLY Want?

05/25/2011 01:05 pm ET
  • Deane Waldman Physician, systems theorist and award-winning author

Years ago for a lecture before the American Academy of Pediatrics, I made a slide titled "The Cheapest Solution To Congenital Heart Disease" that showed a bullet. When my wife saw the slide, she was appalled and exclaimed, "You can't show that! People might think you believe it."

I do believe it. I just don't advocate it. Let's face it: the cheapest answer to any expensive medical problem is death. If you have a baby with congenital heart disease; a friend needing a bypass operation; or a brother on kidney dialysis, just grab a gun and pull the trigger. That is how you spend the fewest health care dollars.

Everyone knows that modern health care is very expensive. So is a Mercedes, a diamond engagement ring, and a house in Los Angeles. If you are wise, you think about more than just the initial cost. You calculate net long-term value.

Suppose over ten years, the Mercedes lasts longer than a cheaper car, requires fewer repairs, and has a higher resale value. Then you add the benefits of prestige, better and more comfortable ride, safety, etc. You determine net value (long-term cost/benefit) and only then decide what car to buy.

Now substitute a baby with a complex congenital heart problem for the Mercedes. Initial expenses are high, from $50,000 to several hundred thousand dollars. No one can just shell out that kind of cash. You and I - We the People - pay it by spreading the financial risks through the whole country through insurance premiums and taxes. What benefits result from that cost?

Benefits to child and family are obvious but not readily quantifiable. Benefits accrue to our nation that can be calculated as both general contributions and specific productivity. The benefits derive from a child who lives to become a healthy adult. If the child dies from lack of surgery or has complications from suboptimal surgery, the USA loses an asset.

What if cheaper health care delivers lesser quality: complications; longer hospital stays; additional procedures; and worse patient outcomes, even death - the "cheapest answer"? What if the more expensive care produces better outcomes - both fewer long-term costs and more benefits? Consider these questions from the perspectives of: payer, patient, provider, and the Oval Office.

The payer - insurance company or government - considers one thing and one thing only: minimizing outlay in this year's budget. No thought is given to long-term anything: actual costs, avoided costs, or benefits. There is no consideration of different medical outcomes and the effects on patients as well as budgets two plus years ahead.

The only things the patient knows are: how he/or she feels; sticker shock from astronomical hospital and doctor bills; and an increase in his or her insurance premiums. With no knowledge of true costs, actual payments, relative medical quality, and especially with no information about long-term outcomes, the patient cannot calculate net value. The patient has no decision-making ability and therefore no control.

The provider has no control either. Suppose the doctor recommends a procedure at Center X but the payer has contracted with the cheaper Center Y, where the long-term results may not be as good as Center X. The provider and the patient are trapped. Cheaper wins but the patient, provider and the country all lose.

If President Obama were the CEO of a company, he would want to protect his company's assets. The primary assets of corporation USA are you and me - the people. Healthy Americans, like smoothly functioning machines, produce and contribute. Sick or dead people do not. It is really quite simple: paying for health care is investing in our nation's infrastructure.

Now you can see clearly what is wrong with healthcare financing: the emphasis on immediate cost. Neither health care payers, nor the providers, not even the patients evaluate long-term net value. How can they without the following information: actual costs (not estimated or allocated); avoided costs; short- and long-term benefits?

If health care were calculated as long-term net valuation, the problems of healthcare financing would be partly dissolved. (If we then re-connect consumer with payer, the rest of the financing equation would balance.)

"Cheapest" may be less expensive in the short-term but is never best.