Why Is Healthcare So Expensive, Part Deux

My next installment on why healthcare is so expensive comes from a lecture given by Dr. Jeffrey Brenner, a professor in the Department of Family Medicine at Robert Wood Johnson Medical School in New Jersey.  He was kind enough to send me his PowerPoint slides.  Rather than try to point to overarching problems (since this problem has many roots) I’m going to try to describe a situation that is all too common here. 

            Dr. Brenner runs an experimental clinic in Camden, New Jersey, one of the poorest cities in the country.  Almost a third of Camden’s residents live below the poverty line, and with that goes high rates of violence, a failing education system, and – guess what? – poor health care.  The school system, police department, and city government have all been taken over by the state (according to Dr. Brenner, their last three mayors have all been indicted).  There are three hospitals in Camden, and apparently they don’t talk much, with each other or with local healthcare providers.  As you read this, keep in mind that according to key indicators tracked by the Dartmouth Atlas of Healthcare, New Jersey is the most highly specialized health care system of any state (measured as a ratio of Primary Care to Medical Specialist labor inputs), and, not coincidentally, the state with the highest Medicare spending per capita during the last two years of life.

            Several years ago, Dr. Brenner organized the Camden Health Database, with the goal of gathering and compiling patient information from the three hospitals.  By cross-referencing names, addresses and other identifying information (to make sure that each patient’s records were appropriately assigned to them, even if they were under a different name) they were able to create a unified database giving an accurate picture of hospital usage by Camden residents between 2002 and 2007.

            Here comes the fun part:  Of the 98,000 patients in this database, the leading hospital utilizer came 324 times.  Let me pull a Joe Biden and say that again: three hundred twenty-four times in a five-year period.  Most of these patients were either on Medicare, Medicaid, or were uninsured.  The most expensive patient cost $3.5 million dollars, and as a group they brought in $460 million of revenue (plus charity care) to the three hospitals, incidentally costing the federal government the same amount.  Of that $460 million, 80% of the costs were incurred by 13% of the patients, and 90% were incurred by 20% of the patients.

            The Camden Health Database project also listed the top 20 emergency room diagnoses, in the period from 2002-2007.  The top four diagnoses, in order, were acute sinus infections, acute ear infections, acute viral infections, and acute sore throat.  Also in the top 20 were headache, urinary tract infections, and limb pain.  The take home point here is that these are all acute problems which, if they had been treated at an earlier stage by a primary care provider, would never have required a trip to the emergency room.   (For those of you who have never been to the emergency room, the costs are astronomical compared to a simple visit to your PCP).

            They further analyzed the top 1% of hospital utilizers and found that they accounted for $46 million (+charity care) in bills to Medicaid/Medicare.  What they were actually charged by the hospitals was much higher.  That $46 million is, according to Dr. Brenner’s group’s estimates, enough to fund 50 family physicians, or 100 nurse practitioners for that same period of time.

            The data indicate that the people of Camden were not making use of primary care providers for preventative and maintenance care, but were instead using the hospital when minor problems turned into major ones.  This generates good money for the hospitals, but represents a tremendous financial burden on the government. 

In light of their findings with the Camden Health Database, Dr. Brenner decided to focus on that top 1%, and organized the Camden Coalition of Healthcare Providers, loosely based on the principles of the Medical Home model.  To make a long story short (I know, too late) they’ve got about 60 patients who are extremely ill, but now have a doctor, a nurse practitioner and a social worker involved in their care.  In other words they are being provided excellent care.  Dr. Brenner described the program as “effective but not efficient.”  While the quality of care is high for these 60 individuals, and they’ve been reasonably successful at keeping them out of the hospital, they haven’t figured out how to transport this model to a larger setting, though they are working on it.

            Anyway, this post has gone on long enough, but I recommend you follow this link to read a short pamphlet about the medical home model (it is an important part of Obama’s vision for healthcare), as well as checking out the Camden Coalition’s website (Dad, I thought you’d find it especially interesting, since you know way more about practice management than I do), and I’ll follow up with a post about some of the solutions being proposed for these problems.