Another public hospital system has to be bailed out by the private sector

Australia following Britain's lead

The Victorian state government has turned to private hospitals for help with reducing its surgery waiting lists. The Government will pay them to operate on 500 public patients. Up to 30 private hospitals, including Epworth and Healthscope, are believed to be interested in the six-month scheme, The Age newspaper says. The scheme would involve performing high-demand procedures in the private hospitals - including non-urgent orthopedic, vascular and plastic surgery - at a rate of $4000 per operation.

The plan has upset health unions, which believe the government should increase funding of the public system, but has been welcomed by private hospitals. Health Services Union state secretary Jeff Jackson said the government provided hospitals with "substantial sums of additional money, and that doesn't appear to have eased or resolved waiting lists in our hospitals".

Australian Medical Association Victorian vice-president Doug Travis said the money should buy more staff to open more beds. Opposition health spokeswoman Helen Shardey said the government's waiting list management had been "very poor". "This is ad hoc policy-making," Ms Shardey said. "It's not part of an overall strategy; it's grabbing at anything to try to fix the system and try to make people believe they're doing something."

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MORE AND MORE GOVERNMENT CONTROL AND RED TAPE FOR U.S. MEDICINE

New reimbursement reporting and compliance rules for physicians participating in Medicare went into effect on January 1 as part of the budget reconciliation bill that passed the House on December 19.... As outlined in Section 6110 of the Senate Deficit Reduction Omnibus Reconciliation Act of 2005, the new rules create a "values-based purchasing" provision in the Medicare program. That provision ties Medicare physician payments, as well as payments for other medical professionals, to new "quality" reporting and compliance requirements, reducing a doctor's payment by as much as 2 percent for certain services if the doctor or other professional fails to report "quality-related" data. Also included under the "values-based" purchasing provision are hospital inpatient services and the services of home health agencies and skilled nursing facilities.

The proposed reduction in payments to noncompliant physicians and providers (1 percent in the first year and 2 percent thereafter) will establish a funding pool to be redistributed the following year to physicians and other medical providers that do comply. The Congressional Budget Office (CBO) estimates the provision will reduce total Medicare spending by $4.5 billion over five years between 2006 and 2010.

The professional literature on values-based purchasing shows limited evidence of value in this approach. A recent article, "Early Experience with Pay for Performance from Concept to Practice," by Harvard University's Meredith B. Rosenthal and colleagues, in the October 12, 2005 Journal of the American Medical Association, attempted to fill the void of published research on this physician payment strategy. The accompanying JAMA editorial ("Pay for Performance Research: How to Learn What Clinicians and Policy Makers Need to Know," by R. Adams Dudley, M.D.) rightly noted there have been "only nine randomized controlled trials of Pay for Performance ... reported in the literature." A review by the Agency for Healthcare Research and Quality (AHRQ) cited in the Rosenthal study concluded "little unequivocal data" supported this approach.

Of particular interest in Rosenthal's study is the observation that a group of Pacific Northwest physicians who were not operating under a pay for performance bonus system scored higher than the California physicians who were. Hence, financial bonuses are likely a superfluous source of motivation when compared with other factors motivating typical physicians treating patients. These other motivators include the desire to help another human being who is suffering, pride in one's work, use of one's skills to meet the challenge of the individual medical case, and the desire to maintain a sterling reputation in one's community. And if these are not strong enough motivators, medical malpractice attorneys are looking over doctors' shoulders as they treat their patients.

In the literature relating to the Medicare "pay for performance" scheme (see, for example, "Pay for Performance or Compliance? A Second Opinion on Medicare Reimbursement," Heritage Foundation Backgrounder No. 1882, October 5, 2005), study after study suggests there are various problems with this approach. These include the lack of evidence for the usefulness of government-imposed guidelines, overemphasis on process in the payment system, the subversion of physicians' professional judgment in individual patient care, the undermining of personalized health care, inhibition of medical innovation, the threat of unproductive "gaming" in the payment system, and a weakening of the traditional doctor-patient relationship.

The new rules establish, in effect, government guidelines for the practice of medicine and tie Medicare payments to physician compliance with those guidelines. That constitutes a radical break from the original Medicare policy that prohibited federal officials from interfering in the practice of medicine.

The new system is pregnant with perverse incentives. Physicians will have every incentive to enroll in "obedience school" and carefully tend to the bureaucracy's paperwork and government guidelines to secure higher reimbursement in a tight fiscal environment, which will soon get tighter as the baby boom generation starts to retire. By diverting the focus of doctors and other medical professionals from appropriate, patient-centered medical care, the Medicare "values-based purchasing" provision will likely create new incentives for physicians and other medical professionals to game the system in unproductive ways. While doctors are fulfilling their reporting requirements, giving the government the data the government wants, real quality could decline even though the measured indicators look good.

More here

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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