An Alternative Health Plan
The merits and costs of President Obama’s health care plan currently are being debated at length. I have an opinion of my own as to what a health plan should be to attack the rising health care costs.
My insight into how we can, and should, reduce health care costs is based on the diagnosis of why costs are rising. I suggest one major reason why costs are rising, and will continue rising even after the government plan is established, is because those who provide health care are profit-oriented.
If, as a CEO, your measure of success is how well earnings per share are performing in your company—and the board will fire you if you are not successful by this measure—I suggest that, almost by definition, you will aim to increase profits by all legal means you can. You, the CEO, will use research costs as an excuse to charge as much as possible for drugs, and do the least amount of innovation that will allow you to claim it is a new drug; change a single molecule, for instance. It really is not a new drug, but legally can be patented, thus forbidding competitive forces that would reduce the cost of the drug.
Doctors are profit-oriented too. They invested years in training, and have staggering student loans to pay back, and for these investments they want a sizable return. In addition, since they are socially ranked by their income bracket, it should not surprise anyone that they are revenue-oriented and can increase their revenues by ordering repetitive returns of patients to their clinic. Furthermore, to avoid being sued for malpractice they over do testing and the insurance companies then have to cover rising costs by charging higher premiums.
The system seems as if it was designed to continuously cause costs to escalate.
Today the government, through Medicare, tries to control how much doctors get paid and what treatments they can provide. The result is that the good doctors opt out of the government plan; they charge as much as they want and get paid by those who have the means. The rest provide treatment that is not as good to those who rely on government assistance; these doctors’ professional discretion is hampered by what the government approves or does not approve. They also get paid ridiculously lower rates, for which they have to submit endless papers to the government.
Government controls of Medicare costs (an A solution from my PAEI code) causes social disintegration and lower-quality medical care for those who rely on the government for their medical needs. Furthermore, it does not reduce the rising cost of medical care. The fact is that the government has been regulating costs for a few years now and they are nevertheless still rising….
I have an idea for attacking the problem at its cause, not in its manifestation.
To start with, I would have all medical school studies for becoming a doctor or nurse be free to the students. They would be paid by the government.
Doctors, when they graduate, would be like faculty members at universities: They should have a fixed salary. Salary increases should be decided, like at universities, by publications, service to the profession, and quality of professional services.
The cost of office visits would be paid to a governmental agency. This way doctors could pay attention to the medical service they provide with no other incentive clouding their judgment. (It would be illegal to take any “under the table” payments.)
University professors are not profit-oriented. They are there to serve. So it should be with the medical profession.
All medical research should be financed by the government; all rights to what is discovered would belong to the government, which could license the production and distribution of drugs to the drug companies. That would cut the cost of drugs. Today drug companies seek enormous profits because they claim they need them to invest in developing new drugs. Under my plan their profits would be controlled because the government would determine, as licensors usually do, the price charged for the drug.
The licensing can be done through a bidding process, so in order to get the license the drug companies will have to offer the lowest cost for production and distribution possible.
All medical journals would be owned and published by the government and no advertising would be permitted. Today, drug companies advertise extensively in medical journals and thus have lots of power over what is published. Furthermore drug companies pay doctors to do the research and thus control what is published. This conflict of interest, because of the financial incentives, can cloud the professional judgment of the researcher.
I suggest that having research done by public funds, licensing production and distribution, and paying doctors on salary will cut the costs of health care to patients.
What is left to discuss is insurance: If insurance companies are profit-oriented why would the cost of insuring not go up?
Here we need a not-for-profit insurance plan that covers everyone. The subject is highly complicated, granted. My attempt, far from offering a solution, is to identify what I believe is the source of the problem: the profit motive. If that is not dealt with, no solution will work. All that is done with bureaucratic controls is to arrest the manifestation and that is not good enough.
Sincerely,
Dr. Ichak Kalderon Adizes
Dr Adizes we think alike and see the government has a role but not to run the system but rather develop broad policies and protections for consumers to have the third party appeal process.
My first position with a not for profit health plan paying doctors on a salary worked and we try an replicate this model elsewhere.
I would take it one step further and that is for the government to help seed medical groups of primary care doctors who follow quality guidelines but also own part of the insurance company. This gives them a way to harvest additional dollars for performance and encourages innovation between insurance companies and medical groups to give the best value to patients.
Right now all these primary care doctors are being bought by hospitals who use them as feeders to speciality care and admissions.They are given little respect but have no way to form a group of their own and leave this bondage ( although they would like to)
So the vision is a series of physicians driven healthplans competing on value.
Excellent article and you have inspired me to be more outspoken with this solution
Bill
Dear Ichak,
of course after so many years in the health care market you understood very well that the high profitability is what motivates major players in this sensitive part of our life, all over the world. We must also accept some facts:
In rich countries like US, EC & Japan people are getting older and they demand better health care.
The salaries of the CEOs in the pharma companies are always huge (why?) They earn even more than the president of US or EC.
There are people all over the world that became doctors (or lawyers) mainly for social reasons and not only for the patient’s benefit. This kind of people do not easily change their habbits and income.
In the reality new chemical entities (medicines) are discovered from fresh and free minds (researchers)or scientists who are dedicated in science and not in profit.
Considering the above factors in my opinion only the goverment approach is not enough to change an established very profitable already existed system.
Sincerely,
A.Motsenigos
Dr Adizes is narrowing in on the crux of the issue and presents policy solutions worth implementing.
The Canadian Medical Association(CMA- the Professional Association of Canadian Physicians)) met last week and debated whether to permit greater competition to complement, leverage and enhance our socialized medical system, seeking to deregulate and liberalize the playing field in a bid to to become more economically elegant and improve efficacy of treatment.
You will know that President Obama,Senator Ted Kennedy and others have held up Canadian Medicare as a targeted model for Amerrican Health Care reform. Much is written in the Canadian press,recently, taking inventory of the Canadian Health system, parsing it, and comparing it to the presently known American model. It is interesting , in this time of North American Health Services upheaval, both Canadian and American systems are moving ideologically toward the ideological middle ground.
After considerable debate, a motion was narrowly passed to support and promote expansion of more profit driven service health delivery services in the Canadian provinces.
If there is one lesson that the Adizes Organizational Life-cycle model teaches , it is that any organization can become bureaucratic,irrespective of economic measuring stick. Employing the model of the life-cyle of organization to maintain, renew and re- engineer a prime Health Services Industry is the driving need. The degree, character and regulatory framework requires a paradigm shift. As Dr Adizes writes elsewhere, a crisis is a welcome and even desirable catalyst to change.
Health Service programs, in Canada and some of the European Asian and Middle Eastern countries, is an embedded social value, best served and overseen by the state, and kept accountable and in a controlled environment of continuous revectoring by a Capi enlightened leadership.
The degree to which will Obama will reinvent the US Health Services Industry will be realized in direct proportion to the courage and vision applied to ignoring, discounting and defusing the resistance of the Health Insurance oligarchy- specifically the Health Insurance and Pharmeceutical industry lobbies.
This is the traction point where “Yes, we can” becomes more than a motivating rallying cry.
We will stay tuned.
Innovative! And I DO appreciate innovation on this topic where it seems no one is coming up with anything that hasn’t been tried (without success) either here or in other countries. I’m sure there is no perfect solution…but I have to say that if we have doctors like professors…I’d be a little concerned having surgery performed by a tenured surgeon if his/her skills were equivalent to some of those I have seen in tenured university professors! I think this is one field where “service” may actually be a good motivator as well though…ideally, I think we would all like to think that our health care providers went into medicine to help/serve others. I also question if this proposed solution doesn’t go counter to the concept of capitalism. Doesn’t capitalism and a free market economy assume that the best product/service which can be provided at the most effective price will have the highest profit? I would suggest that the problem has more to do with the structure of the insurance policies; unreasonable malpractice suits; and fraud more than I think that capitalism itself is the problem. At the end of the day, I’m not sure that I want my health care run in a similar way to the way universities are run any more than I want my health care run by the same organization that gave us the Department of Motor Vehicles.
That’s just my 2 cents…and worth every penny!
While I’m aligned with elimination of the profit motive from insurance and the practice of medicine, I must take exception to your advocacy of paying doctors as they do at universities. Supposedly, professors are compensated and promoted based upon publication, service and teaching. Most undergraduates in large universities (as opposed to 2 and 4 year colleges) are taught by teaching assistants, lecturers and part-time adjunct faculty, paid far below a subsistence income. The few graduate classes taught by tenured faculty are populated by these very same teaching assistants and below-subsistence-wage research assistants. Would you want all of your medical delivered by first-year medical students, while their fully-tenured faculty spent their time publishing and consulting with big pharma and medical equipment companies?
Physicians should emerge from their training without the $150,000-$250,000 school debt through scholarships and earn-outs working with underserved populations. I’ve worked with over 1300 practices over the past 20 years and they’ve all told me they’d be wiling to earn substantially less if they could eliminate their medical school and practice-related debt, not have to pay exhorbitant malpractice insurance and not have to stress over personnel issues and battle insurance companies for payment of delivered services.
Obama heralds the Cleveland and Mayo Clinics, both with salaried doctors and a multi-disciplinary wellness and prevention oriented approach supported by efficient, ubiquitous information technology systems. The French and South Korean government-paid healthcare provide models for supporting healthcare without using for-profit insurance companies. I suggest that you look at those systems rather than universities for a model the USA can emulate.
While I’m aligned with elimination of the profit motive from insurance and the practice of medicine, I must take exception to your advocacy of paying doctors as they do at universities. Supposedly, professors are compensated and promoted based upon publication, service and teaching. Most undergraduates in large universities (as opposed to 2 and 4 year colleges) are taught by teaching assistants, lecturers and part-time adjunct faculty, paid far below a subsistence income. The few graduate classes taught by tenured faculty are populated by these very same teaching assistants and below-subsistence-wage research assistants. Would you want all of your medical delivered by first-year medical students, while their fully-tenured faculty spent their time publishing and consulting with big pharma and medical equipment companies?
Physicians should emerge from their training without the $150,000-$250,000 school debt through scholarships and earn-outs working with underserved populations. I’ve worked with over 1300 practices over the past 20 years and they’ve all told me they’d be wiling to earn substantially less if they could eliminate their medical school and practice-related debt, not have to pay exhorbitant malpractice insurance and not have to stress over personnel issues and battle insurance companies for payment of delivered services.
Obama heralds the Cleveland and Mayo Clinics, both with salaried doctors and a multi-disciplinary wellness and prevention oriented approach supported by efficient, ubiquitous information technology systems. Alternatively, the medical home model for small or solo practices provides practitioners a model for providing better, more cost-efficient care. This model uses office-based nurses to gather information and team with the doctor in information gathering for diagnosis and patient care follow-up. Let’s free up the thousands of nurses who currently perform payment case management for insurance companies. Let them work as part of the medical home model team in providing preventative and wellness-oriented care to patients under a single payer model that pays for healthcare quality and outcomes, in contrast to fee-for-service.
The French and South Korean government-paid healthcare provide models for supporting healthcare without using for-profit insurance companies. I suggest that you look at those systems rather than universities for a model the USA can emulate.
My husband, who has long been a fan of yours since hearing you at YPO meetings, forwarded your blog entry on health care issues to me. From my own vantage point as a pediatrician who has worked on an academic faculty, in private and in non-profit settings, I have to say I couldn’t agree with you more.
This message has got to get out to more people. Those receiving the greatest profits through the health care industry have been extrememly successful in promoting fears about health care reform.
I am encouraged to read your assessment and hope our nation can make progress together.
If you take the profit motive out of the equation, what will be the incentive to research new drugs or procedures? especially when the incentive of the government is to cut costs from forward-looking efforts in an attempt to fund immediate wins to ensure re-election. Additionally, cost-consciousness will inevitably lead to rationing and less-than-compassionate end-of-life management. you can take the evil profiteering out of the system, but you can’t take the evil out of man. at least the profit motive incents man to seek to develop products that are good for people.
u r going from a ‘democratic’ to a socialisttic model. How did this model do under the ‘communistic’ system?
Man’s greed and companies’ position for power are not so easily dealt with
As always I get to the point right away in a few words,you are correct. Joe Newcomb
Ichak,
As the prophet of the Adizes methodology, I am interested in your opinions regarding my thoughts about health care reform process. Please let me know if you think that the following make sense.
Thanks in advance,
Yehoram
I am a former participant in Adizes workshops. I admire Dr. Adizes and have read most of his books. Many of his concepts have helped me to build a successful business. However, I must emphatically disagree that the “profit motive” is the source of the health care problem.
Every year when I renew my company’s health insurance I am frustrated by the lack of competition in the health insurance industry. State laws that restrict competition across state lines, government mandates that dictate what must be covered, tax laws that provide tax deductions for insurance costs to employers but not indiviuals and local monopolies of certain insurance carriers driven by special interest groups and their government bureaucrat beneficiaries are but a few of the core issues that need reform.
Free market solutions may not be perfect, but they are superior to government bureaucracy. In Chapter 8 (Organizational Styles) of his book “How to Solve the Mismanagement Crisis”, Dr. Adizes accurately paints the picture of the “dangerous monster” that is a bureaucracy. God forbid that we put this monster in charge of our health care.
… I’m not on board with this one. This is NOT E/Innovation or Imagination. Just one item: the three professors I have encountered in the last six months were firmly entrenched in their capitalistic-consulting businesses. One was on book tours for the last four months; one was operating an incubator in the medical/pharm business.. attempting to raise $1.5 Million while teaching and researching full time; another, used his graduate students who were placed in solid firms as ‘feeders’ for his consulting practice. Academia is not what it used to be? Socrates would have had a ‘double’ helmlock.
Please find a much better analysis and solution at:
http://www.theatlantic.com/doc/200909/health-care/6
It goes to the source and presents a model that will increase supply and quality of health care using proven free market methods.
When will we learn that big government cannot work because feedback loops are illogical.
Shame on you Dr. Adizes.
lease read all.
>>A doctor in Atlanta tells about how he has practiced medicine over
>>the years and how
>>he will in the future if this bill is passed.
>>
>>This letter is from Dr. Zane Pollard. He is operates at Children’s Health
>>Care of Atlanta. Google him, he has a very impressive CV.
>>
>>
>> Friends:
>>
>> I have been sitting quietly on the sidelines watching all of this
>>national debate on healthcare. It is time for me to bring some clarity to
>>the table and, as your friend, by explaining many of the problems from the
>>aspect of a doctor.
>>
>> First off the government has involved very few of us physicians
>>in the healthcare debate. While the American Medical Association has come
>>out in favor of the plan, it is vital to remember that the AMA only
>>represents 17% of the American physician workforce.
>>
>> I have taken care of Medicaid patients for 35 years while representing
>>the only pediatric ophthalmology group left in Atlanta, Georgia that accepts
>>Medicaid. Why is this.. For example, in the past 6 months I have
>>cared for
>>three young children on Medicaid who had corneal ulcers. This is a
>>potentially blinding situation because if the cornea perforates from the
>>infection, almost surely blindness will occur. In all three cases the
>>antibiotic needed for the eradication of the infection was not on the
>>approved Medicaid list. Each time I was told to fax Medicaid for the
>>approval forms which I did. Within 48 hours the form came back to me which
>>was mailed in immediately via fax and I was told that I would have my
>>answer in 10 days. Of course by then each child would have been blind in
>>the eye. Each time the request came back denied. All three times I
>>personally provided the antibiotic for each patient which was not on the
>>Medicaid approved list. Get the point-rationing of care.
>>
>> Over the past 35 years I have cared for over 1000 children born with
>>congenital cataracts. In older children and in adults the vision is
>>rehabilitated with an intraocular lens. In newborns we use contact lenses
>>which are very expensive. It takes Medicaid over one year to approve a
>>contact lens, post cataract surgery. By that time a successful anatomical
>>operation is wasted, as the child will be close to blind from a lack of
>>focusing for so long a period of time. Again extreme
>>rationing. Solution – I
>>have a foundation here in Atlanta supported 100% by private funds which
>>supplies all of these contact lenses for my Medicaid and illegal
>>immigrants children for free. Again waiting for the government would be
>>disastrous.
>>
>> Last week I had a lady bring her child to me. They are Americans but
>>live in Sweden as the father has a job with a big corporation. The child
>>had the onset of double vision 3 months ago and has been unable to
>>function normally because of this. They are people of means but are
>>waiting 8 months to see the ophthalmologist in Sweden. Then if the child
>>needed surgery they would be put on a 6 month waiting list. She called me
>>and I saw her that day. It turned out that the child had accommodative
>>esotropia (crossing of the eyes, treated with glasses that correct for
>>farsightedness) and responded to glasses within 4 days , no surgery was
>>needed. Again rationing of care.
>>
>> Last month I operated on a 70 year old lady with double vision
>>present for 3 years. She responded quite nicely to her surgery and now is
>>symptom free. I also operated on a 69 year old judge with vertical
>>double vision. His surgery went very well and now he is happy as a lark.
>>I have been told – but of course there is no healthcare bill that has been
>>passed yet – that these 2 people because of their age would have been
>>denied surgery and just told to wear a patch over one eye to alleviate the
>>symptoms of double vision. Obviously cheaper than surgery.
>>
>> I spent two years in the US Navy during the Viet Nam war and was
>>well treated by the military. There was tremendous rationing of
>>care and we
>>were told specifically what things the military personnel and their
>>dependents could have and which things they could not have. While in Viet
>>Nam, my wife Nancy got sick and got essentially no care at the Naval
>>Hospital in Oakland, California. She went home and went to her family’s
>>private internist in Beverly Hills. While it was expensive, she received an
>>immediate work up. Again rationing of care.
>>
>> For those of you who are over 65, this bill in its present form might
>>be lethal for you.. People in England over 59 cannot receive stents for
>>their coronary arteries. The government wants to mimic the British plan.
>>For those of you younger, it will still mean restriction of the care that
>>you and your children receive.
>>
>> While 99% of physicians went into medicine because of the love of
>>medicine and the challenge of helping our fellow man, economics are still
>>important. My rent goes up 2% each year and the salaries of my employees
>>go up 2% each year. Twenty years ago ophthalmologists were paid $1800
>>for a cataract surgery and today $500. This is a 73% decrease in our
>>fees. I do not know of many jobs in America that have seen this lowering
>>of fees.
>>
>>But there is more to the story than just the lower fees. When I came to
>>Atlanta there was a well known ophthalmologist who charged $2500 for
>>cataract surgery as he felt the was the best. He had a terrific reputation
>>and in fact I had my mother’s bilateral cataracts operated on by him with
>>a wonderful result. She is now 94 and has 20/20 vision in both eyes.
>>People would pay his $2500 fee. However the government came in and
>>said that any doctor that does medicare work can not accept more than
>>the going rate (now $500) or he or she would be severely fined. This
>>put an end to his charging $2500. The government said it was illegal to
>>accept more than the government allowed rate. What I am driving at is
>>that those of you well off will not be able to go to the head of the line
>>under this new healthcare plan just because you have money as no physician
>>will be willing to go against the law to treat you.
>>
>> I am a pediatric ophthalmologist and trained for 10 years post
>>college to become a pediatric ophthalmologist (add two years of my
>>service in the Navy and that comes to 12 years). A neurosurgeon spends 14
>>years post college and if he or she has to do the military that would be
>>16 years. I am not entitled to make what a neurosurgeon makes but the new
>>plan calls for all physicians to make the same amount of payment. I assure
>>you that medical students will not go into neurosurgery and we will have a
>>tremendous shortage of neurosurgeons. Already the top neurosurgeon at my
>>hospital who is in good health and only 52 years old has just quit because
>>he can’t stand working with the government anymore.
>>
>> We are being lied to about the uninsured. They are getting care.
>>I operate on at least 2 illegal immigrants each month who pay me
>>nothing and
>>the children’s hospital at which I operate charges them nothing
>>also. This is
>>true not only on Atlanta, but of every community in America.
>>
>> The bottom line is that I urge all of you to contact your congresswomen
>>and congressmen and senators to defeat this bill. I promise you that you
>>will not like rationing of your own health.
>>
>> Furthermore, how can you trust a physician that works under these
>>conditions knowing that he is controlled by the state. I certainly could not
>>trust any doctor that would work under these draconian conditions.
>>
>> One last thing, with this new healthcare plan there will be a
>>tremendous shortage of physicians. It has been estimated that
>>approximately 5% of the current physician work force will quit under this
>>new system. Also it is estimated that another 5% shortage will occur
>>because of decreased men and women wanting to go into medicine.. At the
>>present time the US government has mandated gender equity in admissions to
>>medical schools . That means that for the past 15 years that somewhere
>>between 49% and 51% of each entering class are females. This is true of
>>private schools also because all private schools receive federal fundings.
>>The average career of a woman in medicine now is only 8-10 years and the
>>average work week for a female in medicine is only 3-4 days. I have now
>>trained 35 fellows in pediatric ophthalmology. Hands down the best was a
>>female that I trained 4 years ago – she was head and heels above all
>>others I have trained. She now practices only 3 days a week.
>>
>>Zane Pollard, MD
Good Morning, I am new to blogging but I have been involved in accountancy for over 30 years now. Your post is brilliant reading! We seem to be coming out of the recession and I hope 2011 will be a bumper year. Do I have to click a button or something to subscribe on this blog as I would like to check back now and then. Are there other blogs that I need to know about?
You need to subscribe ,. There is aburton on thw blog for that. If you cant find it write kunal@adizes.com and he will register you.
You can also follow me on tweeter
Interesting viewpoint. I stumbled on your blog as I was looking for any performed studies regarding behavioral patterns of physicians. I am a resident in the field of family medicine in Slovenia, one of the former republics of ex-Yugoslavia. I couldn’t help noticing that some of your propositions were already implemented in Yugoslavia ages ago. That system worked well in socialism, but after transition to capitalism it started falling apart. If I try to describe the problem borrowing your methodology, the system started to erode due to continuous enlargement of deadwood, as you have well described in one of your previous articles. When you put a government in E role, you form managers to A role and emphasize physician’s and other health care personnel P role (which is already present in abundance). Administrators become so abundant that the system starts existing for its own purpose and not for its main purpose – serving patients.
Best regards from Slovenia
I’m wondering if you might possibly tell me what the midterm elections might suggest with regard to free college awards. It looks like the Republicans will certainly start looking to cut everything they can cut knowning that in all probability means scholarships for education. I just don’t understand just how these people think this nation will ever be competitive, if the actual price of higher education continues to increase, but grants become tougher to acquire. It’s scary to think I will be in debt $40,000 or even more along with not knowing if I may actually get a job opportunity after I graduate in this tight economy.
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