20 years in medical devices and physician’s offices, starting with billing and moving up to contracts and budgeting.
Christensen’s piece resonated clearly and is one of the discussions on why pricing in health care is so high. A discussion no one seems to be willing to say much about in the open media. Very simply, the cost of healthcare in the last twenty years is at least by half the fault of continuing government encroachment into what was once a private industry.
If people understood half of the lobbying that goes on to congress from manufacturers and providers, they might be appalled. This lobbying ranges from demanding price increases to medicare and Medicaid, defending against price cuts and lobbying for the inclusion or exclusion of products, regardless of their real benefit or cost savings.
Just as a for instance, I remember about eight years ago, a new product for delivering oxygen to patients had been developed. Essentially, it was a compressor that could take the common oxygen we breath every day, scrub it and deliver the same quality of oxygen that could be delivered by a tank or a compressor (which is essentially a simple machine that takes regular air and compresses, no scrubbing involved, then delivers it through pressure).
The product even had a portable unit, like a portable compressor. The last was important because many oxygen patients are actually a fairly mobile group, even if it is something as simple as travel to the grocery store or physician or moving around their own homes. They aren’t all tied to their beds.
While the initial cost of the machine was slightly higher than the existing compressor and mobile units, it had a potential for decreasing the over all cost of oxygen therapy because it would eliminate the need for the filling, delivery and storage of many oxygen tanks. Most mobile patients would use a minimum of two to four tanks a day. People in the DME industry were excited about the development because the most costly aspects of the service were delivery and storage.
When looking at the mobile device, that could also stand as a stationary device, the cost of that single item was actually less than both of the devices commonly accepted and provided. So, the cost of service would have decreased, the equipment cost eventually decreased and that would have allowed a lower price to the payer, lower cost to the patient in co-pays, etc.
What happened? Well, first, the manufacturers of the commonly used compressor and tank (mobile) regulators lobbied congress good and hard to protect their place in the market and on the Medicare/Medicaid fee schedule. Companies who provided and filled tanks for hospitals and home patient DME joined in because they, of course, would lose an entire market. A market that was growing, as we all know, because the aging population was growing. There were vast amounts of money at stake.
You can imagine the obscene amounts of money that was floating around, events held, donations to PACs and campaigns. Lots of talking points including the “danger” of putting important providers of nationally “imperative” companies (because, of course, there are other uses for compressed oxygen in tanks, including the military) out of business.
Eventually, congress labeled the device “experimental” (the curse of oblivion for many innovations) and the compressor, tank regulators and tank fillers retained their places on the provider list as the devices of choice, the devices that Medicare/Medicaid would pay for. Of course, what happened next?
Well, DME providers began to lobby for an increase in the monthly fee for oxygen equipment because the “tanks” were not covered separately and the cost had to be made up somewhere. Especially as rising costs in fuel made the frequent delivery of tanks increasingly higher for both the producers as well as the service providers. Let’s not even talk about increasing regulatory demands for patient tests and documentation that increased administrative costs.
Certainly, it was not like the service provider could deliver a month’s supply to these home bound patients. Patients who were at home because it was common sense that the cost was lower than keeping them in hospitals and nursing homes. We’re talking about a month of tanks being from an average minimum of 30 to a maximum of 120 or greater (depending on mobility and prescribed use). There are all sorts of issues with storage from space to safety.
As you might have noticed, the price of fuel has continued to rise and so, then the cost of service and the demand for a higher fee reimbursement.
Where might we find this nifty “experimental” device? It is now sold on television, like a novelty item, marketed under “convenience” for oxygen patients that travel, are highly mobile or who just don’t want to have a big compressor (with the long extension cord) or tanks laying around the house. The people who buy it can afford to because they are not solely bound to the fixed income of social security and paying for medical services by Medicare/medicaid. Those where the benefit and cost savings would be greatest.
Private insurers won’t even touch it because, once it is labeled “experimental” by the federal government, that is where it reins on their fee schedule (due to the incestuous nature of price and coverage fixing between government and private industry).
We could blame these industries for lobbying congress to maintain their place on the approved provider list and fee schedule. How dare they stand in the way of innovation and saving tax payers millions. They could have just faded away gracefully. However, we are talking about money to be had by providing services to an ever growing market, the aging, and the only way to get access to the majority of that market is through government health care systems, on their provider list and fee schedule. This is simply business adopting to the system and every business is about edging out the competition. Even if it means leaving innovation behind.
Please don’t get me started with what is happening to providing services to rural communities or the government’s implementation of non-competitive, competitive bidding in healthcare markets. Suffice it to say that this and many other experiences have convinced me that a government healthcare system and any derivative where it is largely involved in the healthcare market (or any market), is the worst, most costly initiative anyone could have conceived.
Some place else, in some other time, this collusion of business and government to control a market, even to the adversity of the consumer, would have been called corruption, but today it is called “business as usual”.
As a disclaimer, I no longer work in the industry and was never employed by the manufacturer of the aforementioned device. Due to those issues of “consolidation”, I am now one of the “underemployed” who is happy just to get a check to pay the bills. A check that is about to be even smaller when the Obamacare program kicks in and I am forced to purchase the really cr@ppy, over priced insurance (I should know, I worked in the industry)of the small franchise I work for or be penalized by the government or forced to choose a probably even worse public sector insurance. I would rather to do as I do now which is pay for services out of my own pocket. It is one tenth the total cost of just my share of the premium.
I would like to make a plea to congress to repeal this disaster and really get a grip on the real fraud that is currently being perpetrated through government control of healthcare. However, I hold out no hopes because that would be like asking the fox to stop going through the open gate to the chicken house and eating all the chickens.
