The Affordable Care Act (ACA), sometimes called “Obamacare,” dominated health care media coverage this year. And rightly so. It is the most significant change in American medicine in more than half a century. But the legislation is just one aspect of a complex and highly fragmented system. It is also just the beginning (not the end) of the process to fix U.S. health care.
Beginning January 1, 2014, the big story will be health care coverage through the ACA-mandated exchanges. But over time, these four overlooked story lines may prove just as important.
1. Location. Location. Location. This first story isn’t about real estate. It’s about the price of medical care by location. This year, a number of investigative reports highlighted regional disparities in the price and use of American health care.
For instance, the Journal of the American Medical Association found the charges for a hip replacement surgery ranged from roughly $11,000 to $125,000, depending on the hospital. In California, the cost of the most expensive hip replacement is four times more than the least expensive. Yet the cost of the implant, the surgeon’s time, the operating room staff and the supplies are relatively similar for each hospital.
Insurers and government purchasers are beginning to recognize that higher prices do not translate to better clinical outcomes. In the future, they may refuse to pay the higher prices when patients elect to have their surgery performed in the most expensive facilities or when they choose the most expensive drug for a particular condition.
But what explains the difference in cost? Two factors: The first is opportunistic pricing in a health care system where the patient – whose bill is usually picked up by a third party – has little incentive to choose a lower-priced facility. The second is a hospital “charge master” that inflates prices well above the actual cost of performing a procedure.
The Pacific Business Group on Health identified this issue and announced it would only pay $30,000 for a hip-replacement procedure. Shortly thereafter, most of the hospitals with whom they contract dropped their price below this level.
We can expect these types of purchaser-driven price demands to proliferate in the near future. The unanswered question is whether the media at large will take notice.
2. Reason trumps convenience in health care? Cesarean birth rates in the U.S. are double the World Health Organization’s recommended rate of 15 percent. Why does that matter? Cesarean births can lead to childhood illness and complications in subsequent pregnancies.
According to the Childbirth Connection, a cesarean section (or “C-section”) is the most common operating room procedure in U.S. hospitals. It’s not only a high-cost proposition to the health care system, it’s also a high risk procedure for both the mother and child.
Elective, scheduled C-sections are important for women who are a week beyond their due date. They help the patient avoid a more dangerous set of complications. But some cesarean births are scheduled “early” — with less than 39 weeks of gestation — for the convenience of the doctor or the patient. These are unnecessary and dangerous. They are dictated by doctor preference, and contradict the best medical evidence.
In the future, we can expect insurers to heavily scrutinize such physician practices. They are likely to refuse to pay for unnecessary procedures, particularly when they add avoidable risk.
3. An apple a day keeps the doctor away. Prevention saves lives, improves quality of life and may reduce overall health care costs in the long run, according to several reports from the Robert Wood Johnson Foundation.
Recognizing the value of preventive services, the government mandated through the ACA that insurance companies include preventive screenings at no cost in the future. The ACA also provided funding for over the counter medications like vitamin D for osteoporosis prevention, aspirin for patients with heart problems and fluoride to reduce tooth decay. In addition, it set aside $15 billion to fund investments in prevention over the next 10 years.
Our nation faces both short-term and long-term challenges. The epidemic of obesity and the proliferation of multiple chronic diseases threaten the future health of our country.
Prevention and wellness activities like diet, exercise, weight management and stress reduction can reduce the cost burden. Unfortunately, physicians vary greatly in their ability to help patients avoid life-threatening disease. In an area such as hypertension management, the average U.S. doctor achieves results that are 30 percent worse than the best doctors. The lack of media coverage around this life-saving opportunity is disappointing.
Funding through the ACA may improve overall performance. But until physicians, patients and the media value prevention as much as intervention, the problems are likely to grow worse before they become better.
4. Decisions based on clinical judgment, not personal gain. As a result of the passage of the Physician Payments Sunshine Act in 2007, drug and device manufacturers will be required to report payments or gifts of $10 or more made to physicians, hospitals and other providers on a yearly basis.
Data collection started in August 2013, with a plan for publication on theCenters for Medicare & Medicaid Services website in February 2014. Already, some of the data are available through individual pharmaceutical and medical device company websites and Pro Publica.
Physicians in many specialties, from oncology to orthopedics to cardiology, make decisions each day that impact the lives of patients. Often their choices — what medication they prescribe, what medical supplies they use, or what type of procedure they perform — impact the financial results of publicly traded companies and their shareholders. It is illegal for these companies to pay direct kickbacks to doctors to influence their decisions, but earning the loyalty of doctors by paying them to be high-priced consultants is common.
Although this legislation does not outlaw these practices, it requires that the dollars paid for these activities see the light of day. The prescribing behaviors of physicians shift when they are the recipients of favors, friendship and small gifts. It is estimated that for every dollar a pharmaceutical company invests in sending a drug rep to a doctor’s office, they earn $10.
How much of a difference disclosure will make remains to be seen. But the fewer external influences on physician decisions, the more those decisions will be based on clinical judgment over personal gain.
The year in review
Putting all of the pieces together, the under-reported stories this year were about the fundamental flaws in the structure of American health care: irrational pricing, questionable decision-making, inconsistent quality, perverse financial incentives and variations in clinical outcomes. Although these themes weren’t altogether ignored by the media, they were overshadowed by the Affordable Care Act.
As a nation, we tell ourselves and the world that we are the best. For a limited number of expensive procedures, that’s true. But U.S. health care costs are the highest in the world and our results are average at best.
Who or what is to blame? Some of it stems from a medical culture that values intervention over prevention. Some of it reflects a health care pricing system that inflates costs with no strong incentive to be more efficient. Some of it is resistance to change, beginning with how we train doctors. And sometimes, it’s the patients who turn a blind eye to inconsistent costs and quality of care, or to the consequences of pharmaceutical advertising and for-profit payments to physicians.
Will the media make it a New Year’s resolution to educate all of us about these important stories in 2014?
Robert Pearl is a physician and CEO, The Permanente Medical Group. This article originally appeared on Forbes.com.