Painless Way to Save Money in Health Care #1

October 13th, 2009 by Al Lewis (alewis)

There are a number of ways to save money in health care without anyone (”anyone” being defined as “anyone who is not a special interest”) feeling a reduction in service or quality. 

 

The first is quite simple.  Believe it or not, when a state Medicaid director puts an expensive new program in place that will ”reduce costs while increasing quality” (one of the cliches of health care), that very same state Medicaid director determines the following year whether the program worked.    In other words, they get to write their own performance review, with essentially no oversight.    In most states, this is statutory:  no other agency is allowed to evaluate these programs for the record, other than the agency that put them in place.  These agencies don’t just say the program worked.  Often they hire expensive consulting firms — the more expensive the better — to “validate” those savings.  

 

If courts worked this way, defendants would be able to reach their own verdicts and, if they didn’t like the verdict, hear their own appeals. 

 

How do we know the current system doesn’t work any better in Medicaid than in would in the judiciary?   Because these consulting firms routinely find more savings from these programs than is mathematically possible.  No one calls them on it because no one has the incentive to say that the program doesn’t work. 

 

North Carolina’s Medicaid program is a perfect example.  They dramatically increased spending on primary care doctors so that people could have more access to care and less need to go to the emergency room.   Mercer Management Consulting claimed that $300-million got saved this way.  However, looking at the actual data shows that they missed by probably $700-million, and in fact the program cost taxpayers $400-million.  Yet, until I “blew the whistle” on them, nobody challenged these findings, which turn out to be mathematically impossible.

 

There are other examples as well.  Throughout the country, expensive programs are encouraged and perpetuated, with consulting firms charging taxpayers large sums to create reports justifying those expenses.   

 

The solution is very simple:  As with every other organization in society, the judgment as to whether a program works or not should be made by another agency or other independent body not reporting to the person who made the decision to implement the program.   For instance, the state comptroller could be charged with measuring the savings or lack thereof.

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One Response to “Painless Way to Save Money in Health Care #1”

  1. Steve Reichenstein Says:

    Bravo! Well said. Great comparison.

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