Transcript Introduction to Health Care Torts - DR

History and Evolution of Medical Care
Institutions
Professor Edward P. Richards
LSU Law Center
http://biotech.law.lsu.edu/
Key Issues
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Scientific medicine is about 120 years old
 Technology based medicine is less than 60 years old
 Doctors are not scientists and many do not practice
scientific medicine.
 Modern medicine is shaped by its history
Health care finance shapes medical care
 Special interests undermine cost-effective care
 Financial tinkering destabilizes primary health care
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Critical Dates in Medicine
1400s
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Birth of Hospitals
Places where nuns took care of the dying
No medical care – against the Church’s teachings
No sanitation – assured you would die
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Early 16th Century
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Paracelsus
Transition From Alchemy
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Mid 16th Century
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Andreas Vesalius
Accurate Anatomy
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Early 17th Century
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William Harvey
Blood Circulation – the body is dynamic, not
static
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1800
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Edward Jenner
Smallpox and the notion of vaccination
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1846
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William Morton - Ether Anesthesia
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1849
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Semmelweis
Childbed Fever and sanitation
Scientific Method
Controlled Studies
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1854
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John Snow
Proved Cholera Is Waterborne
Basis of the public sanitation movement
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1860-1880s - Development of the Germ
Theory
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Louis Pasteur
 Simple Germ Theory
 Vaccination For Rabies
 Pasteurization to kill bacteria in milk
Joseph Lister
 Antisepsis – surgeons should wash their hands and
everything else, then use disinfectants
Koch
 Modern Germ Theory
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Sanitation Movement - Modern Public
Health: 1850s - 1900s
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Lead by the Shattuck Report on Sanitation in
Boston - 1850
 Waste water disposal
 Drinking water treatment
 Pasteurization of milk
Food sanitation
 The Jungle - 1905
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The Business of Medicine in the 1800s
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Physicians are Solo Practitioners
 Most Make Little Money
 Have Limited Respect
No bar to entry to profession
 Most medical schools are diploma mills
 Limited or no licensing requirements
Cannot make capital investments
 Training
 Medical equipment and staff
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Transition to Modern Medicine and
Surgery
Surgery Starts to Work in the 1880s
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Surgery Can Be Precise - Anesthesia
Patients Do Not Get Infected - Antisepsis
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Effect on Licensing and Education
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Once there are objective differences (people live)
between qualified and unqualified docs, people care
 You can make more money with better training
 You can make more money with better equipment and
facilities
Effective Medicine Drives Licensing
 Licensing Limits Competition
 Physicians Start to Make Money
Allows capital expenditures
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The Tipping Point - 1910
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About 1910, going to the doctor, and particularly
the hospital, shifted from being more dangerous
than avoiding them to increasing your chance of
survival.
Flexner Report - standardized medical education
and shaped the modern training system
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Legal Limits on Physician Practice
Organization - 1920s
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Corporate practice of medicine
 Physicians working for non-physicians
 Concerns about professional judgment
 Cases from 1920 read like the headlines
Banned in most states
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Impact of Corporate Bans on Institutional
Practice in Most States
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Physicians do not work for non-governmental hospitals
 Independent contractors governed by medical staff
bylaws
 Sham of “buying” practices
 Not as much of a factor in LA
Charade of captive physician groups
 Managed care companies contact with group
 Group enforces managed care company’s rules
 Physicians can be as ruthless as anyone
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From L'Hotel-Dieu to High Tech
The Evolution of Hospitals
From Nuns to MBAs
Reformation of Hospitals
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Paralleled Changes in the Medical Profession
Began in the 1880s
Shift From Religious to Secular
 Began in the Midwest and West
 Not As Many Established Religious Hospitals
Today, Religious Orders Still Control A Majority of
Hospitals
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Technology in Hospitals - The Advantage
of Hospital Care over Home Care
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Driven by antisepsis - homes were safer before
antisepsis
Started With Surgery
Medical Laboratories
 Bacteriology
 Microanatomy
Radiology
Services and Sanitation Attract Patients
 Internal Medicine
 Obstetrics Patients
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Post WW II Technology
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Ventilators (Polio)
Electronic Monitors
Intensive Care
Hospitals Shift From Hotel Services to Technology
Oriented Nursing
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Post World War II Medicine
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Conquering Microbial Diseases
 Vaccines
 Antibiotics
Chronic Diseases
 Better Drugs
 Better Studies
 Childhood Leukemia
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Effect of Medical Science on Hospital Care
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1930s
 Few effective treatments means no cures other than
surgery
 Long stays, hospitals act as nursing homes
 Care is nursing and palliative
Post-1960s
 Many effective treatments
 Much shorter stays - expansion of nursing homes
 Most care is technological
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Changes in Hospital Financial Models
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Pre-1970s
 Mostly Charitable
 Built on donations, not debt or bonds
 Reduced operating costs and pressure on occupancy
Post 1970s
 Debt
 Stock market - pressure for performance
 Huge pressure on occupancy and profitability
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Joint Commission on Accreditation of
Hospitals
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1950s
 American College of Surgeons and American Hospital
Association
 Now Joint Commission (on Accreditation of Anything
that Makes Money in Health Care)
Split The Power In Hospitals
 Medical Staff Controls Medical Staff
 Administrators Control Everything Else
Enforced By Accreditation
 Depends on Medicare/Medicare waiver
 Seldom pulls accreditation
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Contemporary Hospital Organization
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Classic Corporate Organizations
 CEO
 Board of Trustees Has Final Authority
 Part of Conglomerate
Medical Staff Committees
 Tied To Corporation by Bylaws
 Headed by Medical Director
Raises Conflict of Interest/Antitrust Issues
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Medical Staff Bylaws
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Contract Between Physicians and Hospital
 Not Like the Bylaws of a Business
 Selection Criteria
 Contractual Due Process For Termination
Negotiated Between Medical Staff and Hospital
Board
Limits corporate control as compared to
employee models
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Break
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Introduction to Medical Care Economics
From the Blues to Managed Care
Paying for Medical Care
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Pre-WW II
 Mostly Private Pay
 Some Employer Provided - Kaiser
WW II
 Price Controls
Post WW II
 Health Insurance As Benefit
 Private Insurance
 The Blues
 Medicare/Medicaid
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Blue Cross - Blue Shield
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Developed by Docs and Hospitals
 Sold to Teachers
 Assure Access
 Assure Payment
Reimbursement Policy
 Pay Whatever Was Charged
 Subsidize the Rural Areas
 Subsidized Over-bedding and Over Treatment
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Federal Programs
Social Security Income and Disability
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1930s
Lifted the elderly out of poverty
Provided disability insurance for workers
The disability is quite a big and valuable program
and pays for a lot of medical care
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Hill-Burton
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Post-WWII
Funded construction of community hospitals
Had community service requirements, but those
have all expired
Created the US emphasis on hospital based care
Spent from the 1970s to the 1990s reducing
hospital beds to control costs
Excess beds or Surge Capacity?
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The Great Society
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Medicare
 Old People
 Certain disabled people
Medicaid
 Poor People
 Nursing Homes
About 40% of medical dollars
Fought by the AMA
Made Docs Rich
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No Good Old Days for Patients
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Gaming the System under Fee For Service
 Right to Die As Example
 Cannot Just Open the Checkbook
Greed Is Not Good in Medical Care
 Fee for Service Drives Unnecessary Care
 Hospitals Have to Care More About Money Than
Patients
Rich Docs Are Not Always Better Docs
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Federal Interventions
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Feds Pay About 45% of Health Care
Other Plans Follow the Feds
Usual and Customary Charges for Docs
 Based on the Community
 Adjusted for the Docs Previous Charges
 Complex
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Hospital Costs
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Big dollars are in the hospital charges
Docs only get 20-25% of the health care budget
Hospitals get a lot of the rest
Drugs are an increasing share
Fee for service drove unnecessary care
Open-end reimbursement drove high prices
Hospitals did not even know what things cost
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Diagnosis Related Groups - DRGs - 1983
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Watershed in Health Care Reimbursement
 Prospective Payment (Capitation)
 Based on Admitting Diagnosis
 Fixed Payment
 Some Adjustments
Encouraged health insurers to also manage
physician care
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Making Money Under DRGs
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Fewer Tests and Procedures
 Complete Reversal of Prior Reimbursement
 No Bump for ICU
Reduce Length of Stay
 Dropped About 20% at Once, continued to drop
 Ideal Is Out the Door, Dead or Alive
 Patients Discharged Much Sicker
Which Was Right, Then or Now?
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Federal Laws Enabling Managed Care for
Docs
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Federal HMO Act in the 1970s
 Preempted State Laws Banning Prepaid Care
ERISA
 Passed to allow labor unions to negotiate national
health plans with big employers
 Preempts state regulation of certain self-insured
health plans
 Gave self-insured plans an edge and drove most
employers to them
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Managed Care Organizations - MCOs
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Insurance Plans That Control Patient Care
Includes the Old Alphabet Soup
 HMOs
 PPOs
 IPAs
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Two Major Variables
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Employer or Contractor
 Do the docs work for the plan or a captive group?
 Do the docs contract with many plans, treating
patients based on different plan benefits?
Open or Closed
 Do the docs treat only patients from a single plan or a
mix of plans?
Why do these matter?
 Leverage on the doc's decisions
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Direct Controls on Costs by the Plan
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Pay Less for Services
 Use Market Power to Bargain
 Control Access Points
 Limit Hospital Stays
 Limit Tests, Procedures, and Referrals
Direct Control of Access
 Pre-approval
 Tell the Docs What to Do
 Most Honest
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Indirect Controls
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Capitation
 CRF--Consultation and Referral Funds
 Withhold and Incentive Pools
 Stop-loss and Reinsurance
 Total Capitation
Economic Credentialing
Dumb Down Services
Free Ride on Other Plans or the Government
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The Cost of Medical Care in the United
States
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Health As % of GNP Has More than Doubled in 50
Years
It is 20%-50% Higher Than Europe
Their Health Statistics Are Just As Good
Do They Know Something We Don't?
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U.S. Has A Lower Life Expectancy than
Most Other Industrialized Countries
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Taken as a major criticism of the US system
Is life expectancy really the right measure?
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Life Expectancy Is Not Health
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Bias
 Weighted Toward the Young
 One Baby Is Worth Several Grannies
Only Life Counts
 Discounts Quality of Life
 Nursing Home Is As Good As the Ski Slopes
 Masks Aging Population
 Masks Improved Health
A Good Measure for Developing Countries
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What Complicates Health in the US?
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We Have 3rd World Public Health
 Ineffective Prenatal Care
 Poor Immunization Practices
 Limited Access to preventive and routine care
Teen Pregnancy
 Prematurity
 Poor Parenting
Developed World Leader in AIDS
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Non-medical Issues
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The Problem of the Poor
 Poor Education
 Poor Health Habits
 Cannot Afford Prevention
Geography
 Too Many Isolated Areas
 Expensive to Deliver Care
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How has the Health Care Umbrella been
Expanded?
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Sin to Sickness
 Alcoholism
 Drug Abuse
Miscatagorization
 Nursing Homes - housing?
 Vanity Surgery - life style?
Should Compare Total Social Welfare Budget with
Europe
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The Core Problem
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Public health and primary care does not work well
 Chronic diseases can be mitigated, but not
cured or prevented
 Shifts care to expensive technology and drugs
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Second Order Demographics
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People live longer because of medical care and
public health
 More old people
 More people with chronic illness do not die
 Old people need more
 Total cost goes up
Health is much more expensive than death
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Impact of Governmental and Private Plan
Economics and Special Interests on Care
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High tech care has the strongest interest groups
 Providers and suppliers have a lot of money
 Patient advocacy groups are easy to capture
 Captures every more of the budget
Primary care, prevention, and public health
 Not sexy
 Big savings are low tech, long term
 Not a good news story
 Providers do not have the money to fight
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Specialty Hospital Example
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Pros
 Complex care is safer when regionalized
 Better care at lower prices
Cons
 Do not money losing services
 Do not take uninsured patients
 Shift the most valuable patients from community hospitals
 No EMTALA requirements if no ER
Dramatically increase unnecessary surgery
 No limits on construction in LA
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Patient Directed Care Example
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Patients will spend their own money and will thus make
better decisions
 What is their knowledge base?
 Can you really learn what you need on the WWW?
How will this play out for preventive care?
What is the incentive for providers?
 Feel good drugs?
 Antibiotics?
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Health Care Reform
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Who will lose?
Who will win?
How will we pay for expanding access?
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First Shot in the War Against Reform:
Comparative Effectiveness Research
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Pharma and their supporters say it will interfere
with your doc's right to make the best decision for
you
Question - how can he make that decision with no
comparative effectiveness data?
What is Pharma really worried about?
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