James peppers his classes with anecdotes about W. Edwards Deming, arguably the original quality guru, and it is easy to see why Deming would be attractive to James. Deming grew up on a farm in Iowa in the early 20th century and majored in electrical engineering at the University of Wyoming. During World War II, he was part of a committee that helped the government make wartime production more efficient. After the war, his statistical methods caught on in Japan, and the Japanese credit him with helping to make their postwar boom possible. The so-called Toyota way stems from Deming’s work. Eventually, the same ideas caught on at General Electric, Intel, Wal-Mart and elsewhere in this country.
But there is a fundamental difference between Toyota and Intermountain [the hospital chain to which this James fellow has brought the scientific method]. As Toyota built better cars than its competition for less money, it won new customers. Some rivals matched its successes (as Honda did); some lost market share (as Detroit did). No such dynamic exists in health care. ...
...
Even more important than how we choose our health care, though, is how we pay for it. .... [I]f a hospital does a rigorous analysis of what actually works, it is likely to discover a fair amount of waste.
But in our current health care system, there is no virtuous cycle of innovation, success and expansion. When Intermountain standardized lung care for premature babies, it not only cut the number who went on a ventilator by more than 75 percent; it also reduced costs by hundreds of thousands of dollars a year. Perversely, Intermountain’s revenues were reduced by even more. Altogether, Intermountain lost $329,000. Thanks to the fee-for-service system, the hospital had been making money off substandard care. And by improving care — by reducing the number of babies on ventilators — it lost money. As James tartly said, “We got screwed pretty badly on that.” The story is not all that unusual at Intermountain, either. That is why a hospital cannot do as Toyota did and squeeze its rivals by offering better, less-expensive care.
For all of its focus on efficiency, Intermountain, too, can be tempted by the dark side of the fee-for-service system. In one committee meeting, I listened to a debate about how much the hospital should charge patients for a certain medical device. Intermountain previously had negotiated a price reduction from the manufacturer that saved thousands of dollars on each device. But the hospital was still charging patients the old price, and the insurers, including Medicare, were still paying. That was what their reimbursement charts said they would pay.
A few people in the meeting were clearly bothered by this. They asked the finance executive, participating by speakerphone, if anything could be done. One committee member argued that Intermountain (which is nonprofit) should not overcharge for a treatment, even if it helped the hospital cover its overall expenses. The finance executive replied, apologetically, that changing the reimbursement rate would cost Intermountain millions of dollars and that there did not seem to be any way to make up for the loss. The meeting then moved on to another topic.
The last two paragraphs seem out of place with respect to what goes before. Of course they should continue to charge the same amount for the same benefits to the patients. If they want not to make a profit, but to serve some other set of goals, then would this really be the most effective way of using those millions of dollars, or are there several more poor patients who could be handled pro bono, or another community education initiative, or some other use of the money that would better serve the organization's mission?
I have heard, though without the details, that Medicare moved briefly in the eighties toward outcome-based fees, creating the incentives for suppliers of medical care to reduce costs, but around 1991 shifted back toward a cost-reimbursement model. Medicare, for better and worse, plays some role in creating norms in the health insurance market. However, let me take issue with this:
As long as doctors and hospitals are paid for each extra test and treatment, they will err on the side of more care and not always better care. No doctor or no single hospital can change that. It requires action by the government.
(It is the Times....) I'd love to see Medicare, Medicaid, VA services — anywhere government is, appropriately or inappropriately, involved in reimbursing medical expenses — move to paying for outcomes rather than inefficiency, but I expect a lot of the action that government needs to take here is to get more out of the way. How do state regulations of health providers and insurers drive inappropriate behavior? How does the tax code? Can we at least get to where the government is causing less harm than good on this? (In New York, we almost certainly can't.)
Saturday, October 31, 2009 :::
If you've been following the special election in the 23rd Congressional District of New York, you haven't been following it here. To recap, a moderate Republican Congressman was appointed Secretary of the Army, leaving a vacancy. A special election was called for the day after the first Monday in November (i.e., this coming Tuesday), with party nominees chosen by the heads of the county party committees for the counties in the district. The Republicans chose a woman named Dede Scozzafava, a current member of the Assembly -- the state-level equivalent of the House of Representatives -- who, I've read, does not actually have an unusually liberal voting record for a New York Republican, but who is a liberal on some high-profile issues, such as card check, and has been portrayed as liberal in this race.
This short NBC synopsis implies that New York is unusual in allowing third-party candidacies, which is, of course, bunk; on the contrary, New York is unusual in allowing third parties to endorse candidates from other parties. Usually, the Conservative Party does simply cross-endorse the Republican, but if the Republican is too liberal, they will come up with their own candidate. In this race, they have picked an accountant named Doug Hoffman.
Scozzafava started with a lead, but Hoffman got a lot of endorsements and donations. Most interestingly, a board member of the Club for Growth, which has endorsed Hoffman, registered a committee to produce and run an ad declaring Scozzafava "the best choice for progressives". The ad is deceptive about its origin — a reasonable viewer would assume it was made by a supporter of hers — but it doesn't mischaracterize any of her positions.
Recent polls indicate that Hoffman has taken ground to the point where he will not be the spoiler in this race, though she could be. The Albany Times-Union has a geographic analysis of how this happened; if you're inclined to follow exactly one of the links in this entry, I would recommend that one.
Last night or this morning or so, Scozzafava effectively dropped out, issuing a statement which I found touchingly self-aware, especially coming from a politician. I think Hoffman has to be considered the favorite now (he might even have been before), but Democrat Bill Owens is getting plenty of support. For what it's worth, Intrade gave Hoffman a 50% chance of winning yesterday and about a 70% chance now.
"As our administration makes progress on the agenda that Washington has ignored for too long, we expect we'll get some news coverage of that progress that we like and some tough coverage that we don't," White House spokesman Josh Earnest said. "It's not unlike the New Orleans Saints, who are getting lots of good coverage of their perfect record so far--certainly better coverage than the [2-5] Redskins--but it doesn't mean the Saints have liked every story that's been written about them since training camp. It goes with the territory."
The New Orleans Saints are undefeated because they have focused on one thing: playing great football. Unless President Obama and his men get serious and focused on governing, they'll end up like the St. Louis Rams--winless, and nearly owned by Rush Limbaugh.
Friday, October 30, 2009 :::
Voting for Mayor Bloomberg is a bit like voting to sentence a man to death. I can well imagine myself doing such a thing, but I could take no joy in it; it may be the right thing, the best thing to be done under certain circumstances, but it makes stark how far the world falls short of perfection. It is an act of capitulation to the reality of failure.
Thursday, October 29, 2009 :::
The current administration has been harsher toward critics than should be considered decent, but I can't get worked up about this, at least as described:
President Obama isn't taking kindly to a television ad that criticizes his opposition to a popular scholarship program for poor children, and his administration wants the ad pulled...
"I saw [Holder] at an event," said Chavous. "He did ask me in front of others to pull the ad. My response was, 'No, and I tell you what, if the president does the right thing, not only will we pull it but we will celebrate him.' "
Some of the rhetoric about Fox News and the tea party protesters could be considered threatening or, at best, unPresidential. But I think a cabinet official can go as far as "ask[ing]... in front of others" without being guilty of abusing his power (in fact, if he wanted to imply a threat, I would think he'd do it in private, like Spitzer).
Tuesday, October 27, 2009 :::
From Science (October 2, p.26–27):
Wow.
That was the reaction of many HIV/AIDS researchers last week to the news that a large clinical trial of an AIDS vaccine worked— the first success in 2 decades of effort. The two vaccines used in the study as a one-two punch had only a modest ability to protect people from HIV, and the results just barely qualified as statistically significant [at the 95% level]. ...
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One of the most perplexing findings is that the vaccines prevented infection by HIV but failed to reduce levels of the virus in people who did become infected. "Most people expected it would be the other way around," ....
....
.... "The results tell us two things: These vaccines work, and they don't work well enough" says statistician Donald Stablein, president of the Emmes Corp. in Rockville, Maryland.
He's the statistician, I'm not, and I don't know how many failures they had in "2 decades of effort", but if I do 20 experiments and finally get a result that has a 1/20 chance of occurring by chance, I'm not jump-up-and-down excited. If my theoretical prior is leaning against the result, I'm that much more not excited. This apparently was a rather expensive study, and was controversial for that reason; it may be that this is a good enough signal to justify another expensive study.
p=0.039, by the way. In 3 years after receiving shots, 74 infections in the control group, 51 in the experimental group, about 8,000 people in each group.
