Healthcare Costs: The Perpetual But Evolving Seesaw

It is no news at all to anyone reading this or anything else at all in the media for the last couple of decades that in the United States, we have the costliest health care services in the world and that we do not get our full “bang for our [many] bucks” in the cost equation. Yet as far ago as the 1970’s the world’s wealthiest groups in the world came to our hospitals and big name healthcare clinics for the “top healthcare.” I recall then when certain families of a certain “royal” family born of petroleum revenues and riches came to my training, teaching and later, practice affiliated hospital for all sorts of medical and very secret psychiatric care. Those folks always created a great stir in the entire hospital system. They usually took over at least an entire wing of a floor of the hospital and had instituted all their dietary restrictions, religious requirements, and at times brought some of their own staff; contrary to the usual undertone of some prejudice, their trappings and accouterment of their societal practices actually made things easier. But the greatest stir was always when they left the hospital to return home at the end of the treatment stay for whoever the patient(s) was or were. These folks would bestow expensive “trinkets” upon the hospital staff they had liked and favored. The gifts were in the league of Rolex watches and whatever was in vogue at the time but included eye-popping jewelry, expensive Italian shotguns and on and on. Cost of the medical care was of course no impediment for these folks and their new contemporaries in the decades since, in the rapid incubating industries of high fashion, investment, mergers and acquisitions, international banking (and who knows, maybe even money laundering), drug lords under assumed identities (usually in highly securable and ‘safe’ free standing clinics instead of rambling hospitals with as many security holes in them as one one of my old sweaters. This phenomenon of perhaps ostentatious consumerism of costly healthcare is one of the weird epiphenomena of our healthcare ‘industry’ that illustrates its almost bizarre contradictions. And it occurs in all the big name medical institutions in the countries in the northeast, south, midwest, far southwest, upper far west; you name a region with big world beating specialty medical care in one or more disease and you will find from time to time, the world’s supremely wealthy beating a path to their door.

Some countries have taken difference copycat or “opposite-cat” approaches to this medical social snobbism of extreme consumerism. India and Thailand have in the last few years gotten into or started the cheaper markets for elective surgeries especially for fractions of the costs of standard American healthcare institutions. There does not seem to be too much wrenching of scrub scrubs suits, self-flagellation with IV lines by surgeons decrying this development but it is going to be interesting if this development starts to significantly cut into the receivables of lots of hospitals.”Oh, I had my gall bladder done in the Punjab, I had a great time, and save $9,000 too!” Which is to say we still do not have true competition in this country. Any of you free marketeers listening out there? All we have is siloed, protected from almost any similar medical business, sectors, having no overarching economic influences that touch more than one sector and therefore the Great God of Free Market Competition that has for 30 years been supposed to have controlled prices. What we have are ‘cooperative co-monopolies.’

Let us review for a few lines what we have tried.

Medicare and Medicaid were structured several years ago in the last ‘health care cost reform’ WITHOUT the legislative permission from Congress, the purchased members of Congress and the Big Pharma drug companies, to thoroughly and truly negotiate and drive down competitively the prices of astronomically high pharmaceuticals.

In the Clinton Presidency, now two decades ago, the Republican notion of actually (horrors of horrors, trying free market pricing forces, which we have been told every 17 minutes during election seasons in political commercials, is a good thing but has never genuinely gotten tested in the real marketplace.

The loss of competition of rationally regulated (a nasty, bad word apparently in latter 20th century and early 21st century free market economics) has evolved to such an immoral manifestation of corporate greed, that very old drugs, that have been generic (meaning low priced and economical), have been “rebranded,” and have soared to previously unimaginable multiples of their old, traditional, taken for granted prices.

We have tried HMOs in the late  1980’s and 1990’s in which corporate, or “business,” practices, and “mergers and acquisitions,” more stable levels of “capitalizations,” were tried. Associations of the insurance companies, who somehow all seemed to start doing the same things at the same time (in other quarters, this coordinated activity for gain under certain conditions is called “collusion,” or even worse, “conspiracy,” was implemented to squeeze the costs out of the healthcare systems by reducing payments to providers. This was not inducted competition as it was called early on but imposed lessened payment practices. It is kind of like all the car insurance companies suddenly telling all the body repair shops that to ‘cut the fat out’ of the car body repair business, ‘we are just going to pay all of you less.’

Then the HMOs went too far and started denying needed medical procedures and treatments and imposing cost INCREASING measures. These included hiring thousands of less trained healthcare workers, i.e., nurses, to tell surgeons they could not operate and had to try other things first. As retail and other industries pioneered the “race to the bottom,” model of operating, (or maybe that was the television industry in programming quality), persons with high school educations and notebooks full of canned and scripted responses and checklists started making medical decisions by phone. This added expense, some would argue it added suffering as well and many providers would argue it imposed a lowering standard of care. And of course, everyone in the “industry” of cost cutting ignored and did not discuss the added cost of employing thousands of cost cutters. But as they became a source of too much cost themselves somehow, we then tried “outsourcing,” just as the customer service complaint industry was doing, hiring low wage English speaking teleworkers in low-cost countries in other continents that were happy to have the work but often could not apprehend or discern many American regional dialects, and neither could we understand theirs.

In private mental health beginning in the late 1980’s and hitting its peak by the end of the 1990’s, we implemented the insurance industry provider payments squeeze approach. No one in the medical or policy world paid much attention even though psychology and psychiatry groups screamed to the professional rafters trying to warn the rest of the healthcare industries (“YOU’RE NEXT!”) Now there was glaring justification for cost policing at least in the private inpatient psychiatric hospital business. A number of psychiatric inpatient free-standing hospital chains were not only overcharging insurance companies for inpatient days of care, but were milking patients’ policies until their benefits were exhausted and then discharging them. When the cost clamps came down on that practice after over 15 years of this kind of true, prosecuted and convicted economic crime, especially of two then very well know name chains, the inpatient rates were so low that many reputable private hospitals in psychiatry either downsized and drastically cut their beds or closed altogether, a trend that only recently has been to reverse itself mostly because of the crisis of the need for all models of inpatient psychiatric bed treatment capabilities in all regions of the country.

Now we are in the age of Privatization. States left and right, north and south have been engaging in “mental health reform,” since various start times for different states commencing in the early 1990’s. The states have by and large downsized for both good and expedient reasons, the numbers of state funded inpatient psychiatric beds by over 2/3 compared to the previous numbers in the 1950’s and 1960’s. At that juncture, the generally accepted number of state hospital inpatient psychiatric beds was and still is quoted as 550,000. Nowadays the numbers are generally quoted as in the 70,000 range and for the first time, there is starting to be a very slight but gradually accelerating increase in those beds.

County based “mental health centers,” in the majority of states have been closed, restructured and “merged,” (another not so accidental business term), into region wide mental health service areas. In many states, over a decade ago, the numbers of offices and facilities were closed and ‘consolidated,’ to central locations in the ‘service areas,’ or ‘catchment areas.’ Jokes about sparsely funded counties having only a toll free phone number to call to secure appointments in the nearby bigger city were not jokes. Plans and arrangements for mental health services were often based upon a rational basis or factor, such as population. Geographic areas for provision, allocation, distribution, and location of mental health services were determined by drawing up areas, almost like congressional redistricting, that held a certain number of residents of population densities to merit placement in those areas the mental health services. Often of course, in non-megalopolis areas like the 50 largest cities in this countries, services would be located in big enough small cities that already had established private outpatient mental health practitioners. Areas for locations of outpatient services would have to have 150,000, 200,000, or whatever population number was determined to be the deciding factor.

All this centralization was designed to save money. Duplicate offices of administrations and such were closed in one central location’s or county’s facility. Inevitably though, this line of thinking made its way in some or many of the new mental health care organizations, into the distribution of services. Mental health providers were grouped together in fewer locations in places to save money on rent, overhead etc. I cannot in all honesty state to what degree this happened as I truly not been able to find understandable or good data on this phenomenon in a couple of years searching public sources large and small, state or federal. But I know it happened as media stories emerged all over the country during those years about providers’ offices being a unconscionably lengthy drive from towns in sparsely populated states in the south, west, etc.

Then, a corrective measure appeared that is still operating in some or many parts of the country of ‘therapy in the home.’ For the most part, this is utilized in child and family work. It is usually rendered by the least trained level of mental health care provider, counselors with varying degree of training. These providers are mobile and travel to a family’s home and do all kinds of therapeutic services that may well be suited to in home work, such as work with developmentally delayed children and adults, behaviorally disturbed minors, substance abuse situations, parent child relationship conflict clinical needs, etc. Many of these are indeed well suited to various kinds of these needs. But the clinicians are more often than should be the case, less well trained, far less experienced than they should be to work with complex difficult cases, work alone with no backup staff or co-therapists. The pay is lower  which saves the mental health care organizations monies and makes the service delivery model “more efficient.” For families that do not have transportation means or ready access to such, these services are truly an absolute Godsend. In this regard, this kind of mobile mental health clinician is a model that I think has

Many of these are indeed well suited to various kinds of these needs. But the clinicians are more often than should be the case, less well trained, far less experienced than they should be to work with complex difficult cases, work alone with no backup staff or co-therapists. The pay is lower  which saves the mental health care organizations monies and makes the service delivery model “more efficient.” For families that do not have transportation means or ready access to such, these services are truly an absolute Godsend. In this regard, this kind of mobile mental health clinician is a model that I think has enormous potential both in the small town-rural settings and dense city urban areas. I do predict and expect that inevitably that as the serviced demands grow upon this model of delivery, the cheap lower cost labor model will have to give way to employing more experienced, clinicians with far deeper clinical skills. However, the problem with this model as has been seen in public departments of social work is that this work is very trying, much of it done after daytime work hours, and undeniably can be unpredictably hazardous or dangerous. Consequently, the turnover rate is very high no matter what. And lastly, it is not an approach that can be employed as much as was originally thought, as there is a lot of costly down time as workers drive from appointment to appointment. Not as efficient as the old fashioned “office model.”

In recent years to bring this discussion closer to the present, the mental health reform movement at the states’ levels is beginning to resemble the nearly 40 years we have undergone in this country of the deregulation of the telephone industry when Judge Harold Geneen struck down the concept of “Ma Bell,” and shocked the nation, the business world and every telephone user. What were we going to do with AT&T as the maternal giver, maker, and fixer of all our phones? Would there be no more Princess phones for teenage girls? What would happen to our monthly bills? To Bell Labs was the geeks’ world question.

This decision set the world of the monopoly of an industry on its ear (for a while at least). It broke up Ma Bell into the “Baby Bells.” Smaller, more efficient they would be. More competition would bring down prices especially for long distance calls for which, in my family, to call friends and potential employers of my parents’, we would have to save up out of the family budget for overseas calls! The Baby Bells started competing. New phones came out. New rates came out. New non-Bell related phone companies, thanks to MCI, which pioneered lower prices for long distance calls and God Bless Us One and All as Tiny Tim would have said, started PHONE CARDS for goodness sakes! Then we had the advent, the invention of cell phones and nothing has stayed the same.

BUT, and it IS a big but, the phone companies which for all intents and purposes are cell phone companies have been merging back together for the last 10 or so and recreating the old monopolies. So we are in a surprising unforeseen business cycle.

But enough of phone companies. In mental health reform circles which is what I am supposedly writing about here, we are witnessing the same thing. In state after state mental health care organizations are becoming like the phone companies. Make no mistake about it, they are “in business,” and are no longer “healthcare service entities.” They have to make a profit in this fashion and circumstance:

Most states have or are or will move to block grant funding of fixed amounts of monies for mental health services likely based on the number of “heads,” (another impersonal word for clients or patients). The regional administrative organizations that now are empowered by the states to dole out the money for mental health services, in effect, give the states some distance between providing the funding and providing the service. The old saying, “How you spend your money is up to you, not me, you are responsible for the service and the outcome. If it all goes bad, it is on you.” Now this is the very cynical way of viewing things I must say in all fairness. The states can budget these monies with a helpful degree of certainty. The costs likely won’t balloon surprisingly in undesirable directions, i.e., up too much. The states that are still in dire economic straits such as Illinois that just about went bankrupt in July of this year (2017) comes to mind immediately. So tough economic times are still making themselves felt in a big way all over as we linger in our longest Recession ever.

States are seeing the smaller mental health service provider bodies-companies-entities band together or “merge,” (there’s that business term and model making its presence felt again and I am not being satirial or anti-business) in order to survive. Capital is needed to cover areas, expand services that regulatory and oversight bodies from the state governments are deciding it is well nigh time to expect and require after nearly 20 years of reform efforts with multiple re-starts.

In my state, I must say that things have gone through many stages of evolution in the forms of all these services and models of organization and distribution. Things have been more and more positive for several years though we still have layers of problems, but that circumstance is to be expected. One thing I think we have learned is that this scope and mass of reform (maybe “reorganization” is a much better and less judgmental term) is that it will take on average in my estimation at least three decades to arrive at a pretty good level of service delivery. Another painful lesson has to be that the old cannot be thrown out like many quarters of dedicated reformers thought we could. The biggest and best (or perhaps worst) example has been the abolition of inpatient psychiatric treatment beds both public and private. That was a disaster everywhere but an understandable one. No state going through the dot com bust, the S&L bust in the Southwest (don’t forget that one), the indirect expense of now 16 years of the War On Terrorism in the Near-Far East, the housing and hedge fund scandal bust, and the lingering Great Recession, could afford what we used to have which was a not very good system in many ways. Now my state has the national honor of being the only state with more than one state psychiatric hospital that will have replaced ALL of its old state hospitals by late next year.

One thing I think we have learned is that this scope and mass of mental health reform (maybe “reorganization” is a much better and less judgmental term) is that it will take on average in my estimation at least three decades to arrive at a pretty good level of service delivery. Another painful lesson has to be that the old cannot be thrown out like many quarters of dedicated reformers thought we could. The biggest and best (or perhaps worst) example has been the abolition of inpatient psychiatric treatment beds both public and private. That was a disaster everywhere but an understandable one. No state going through the dot com bust, the S&L bust in the Southwest (don’t forget that one), the indirect expense of now 16 years of the War On Terrorism in the Near-Far East, the housing and hedge fund scandal bust, and the lingering Great Recession, could afford what we used to have which was a not very good system in many ways. Now my state has the national honor of being the only state with more than one state psychiatric hospital that will have replaced ALL of its old state hospitals by late next year.

Another painful lesson has to be that the old cannot be thrown out like many quarters of dedicated reformers thought we could. The biggest and best (or perhaps worst) example has been the abolition of inpatient psychiatric treatment beds both public and private. That was a disaster everywhere but an understandable one. No state going through the dot com bust, the S&L bust in the Southwest (don’t forget that one), the indirect expense of now 16 years of the War On Terrorism in the Near-Far East, the housing and hedge fund scandal bust, and the lingering Great Recession, could afford what we used to have which was a not very good system in many ways. Now my state has the national honor of being the only state with more than one state psychiatric hospital that will have replaced ALL of its old state hospitals by late next year.

 

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Author: Frank

I am a older child, adult, geriatric teaching psychiatrist with over 30 years' practice experience in North Carolina, first at Duke as clnical teaching faculty, then in Western NC as a primary child psychiatry specialist. I have taught and supervised child psychiatrists and psychiatrists in training and many other mental health professionals and taught at two medical schools. I have served in many public and private practice settings. My primary interest is in observing and documenting the ongoing mental health reform efforts in the State of North Carolina and documenting its sucessess and failures at all levels. My favorite pastime among many others is spoofing my friends and kids with my deadpan sense of humor.

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