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January 04, 2012

Me too! It's not fair! The tragedy of the commons in the health care marketplace

There are at least two conversations going on in the health care marketplace today, each focused on one of two key questions. One is: How can we achieve the Triple Aim? The other is: Why do they get to do that?  (It's not fair! I want more!)  

Until we stop asking the second question, we can't answer the first question. Why? Because all too often the answer to the second question is the equivalent of: It's OK, Timmy, I'll buy you TWO lollipops; pick whichever ones you want.  

It's the tragedy of the commons, transposed to the health care marketplace.

Recent cases in point:

  • Avastin
  • Tufts Medical Center - Blue Cross Blue Shield of Massachusetts grudge match
  • Mammography and PSA guidelines

1.    Avastin.  Late last year, the FDA yanked its breast cancer treatment approval for Avastin, based on a finding that it does not meet the "safe and effective" standard. CMS says it will still pay for the drug anyway, as will many commercial payors, based on physician judgment.

2.    Tufts Medical Center - Blue Cross Blue Shield of Massachusetts. The contract negotiation (out in public view) focused, in part, on Tufts' complaint that BCBSMA pays way more for health care services provided by another network, Partners Health Care, and that it should be compensated on the same scale.  (Others have noticed this disparity too, and have found that higher payments were not accompanied by higher quality -- see reports by Massachusetts state agencies.)  In the context of the present discussion, we may wish to consider whether Partners should be paid less, rather than whether Tufts Medical Center should be paid more.  This episode, according to some, will pave the way for more regulations.

3.    Mammography and PSA guidelines.  Evidence-based medicine says fewer tests are needed, yet consumer demand based on anecdotal evidence, or unwillingness to shift gears becasue of expaectations based on prior recommendations, remains in place, and some payors elect to continue to pay for testing in siutuations that the evidence says testing is not warranted. 

(These are just a few examples "ripped from the headlines" to make a point -- please don't attack my conclusions if you disagree with the specifics of these examples offered, and I invite you to offer additional examples.)

The health care marketplace is, not to put too fine a point on it, imperfect. Often, patients demand goods or services based on direct-to-consumer advertising or peer recommendations without an evicence-based clinical need, physicians are happy to order the drug or the test because they have little or no economic incentive to refuse (and perceive an economic incentive to comply -- avoidance of a potential malpractice case over a missed diagnosis, for example), and patients have little or no exposure to the actual cost of the drug or test at issue.  Things are changing, to be sure: the patient co-pay for the demanded drug may be a little higher or the patient may have a high-deductible health plan, the physician may have a slight disincentive to ordering the more expensive drug or test, but thus far these economic incentives have not been significant enough to shift behavior in a significant manner, and the commons -- the money available for all public and private sector spending, on everything -- has been laid waste: diverted, a few dollars at a time, into the gaping maw of the health care beast.  The result is not improved health status -- just increased health care spending, and decreased spending on everything else.  

Unfettered patient choice coupled with payor-provider risk sharing seems to some to be a recipe for disaster (see: myriad predictions of ACO-induced doom and gloom). CMS is staking out a claim in this new territory, and the folks at the Center for Innovation are being quite frank about it: We have a big chunk of change at our disposal right now to help change the health care marketplace, but in the future we will all have to do more with less.  

At least one national physician group has finally come around to this way of thinking: Per NPR, The American College of Physicians greeted the new year by issuing the latest edition of its ethics manual, which includes the following passage:

In making recommendations to patients, designing practice guidelines and formularies, and making decisions on medical benefits review boards, physicians' considered judgments should reflect the best available evidence in the biomedical literature, including data on the cost-effectiveness of different clinical approaches.

ACP President Virginia Hood told NPR:

We also have to realize that if we don't think about how resources are used in an overall sense then there won't be enough health care dollars for our individual patients. So while concentrating on our individual patients and what they need we also to think on this bigger level both for their benefit and for the well-being of the community at large.

It seems to me that there is a way forward, but it will have to involve a delicate mix of market and regulatory models.  Adding ethics into the mix may be the way to pull us out of the purely economic tragedy of the commons.  

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

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Sorry, but the contrarian in me feels compelled to comment on the suggestion that consumers' unwillingness to "shift gears" in the face of the most recent "Evidence Based (tm)" notions is a sign of a market failure.

Those same consumers may be aware of the flawed statistical reasoning behind some of the evidence-based-studies-du-jure, or they may simply have noticed how frequently the evidence-based pendulum swings back and forth and have lost some blind faith in the decrees of the medical bureaucracy.

Because markets don't do what credentialed experts want isn't ipso facto evidence that they are flawed.

I didn't call demands for non-evidence-based health care a market failure. There are two separate points here: One, we have an imperfect market because of knowledge inequalities, lack of (provider and patient) exposure to, and knowledge of, true cost, and payor unwillingness to limit freedom of choice after the managed care debacle of an earlier time. Two, failure of clinicians and patients to follow guidelines (and there are plenty of exceptions and caveats to good guidelines, including, e.g., the mammo guidelines cited, so this is not about blind adherence to ironclad guidelines) is one cause of our collective inability to dig ourselves out of the black hole of health care expenditure growth. The MRI-in-every-garage approach ultimately won't do anyone any good, and that is what an unregulated market has wrought. We have a high-cost, not-so-high-quality health care "system" in this country, and the question on the table is: How do we make it better? The me-too perspective (to the extent held by patients and providers) stands in the way of achieving the Triple Aim.

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