In his 1993 book, "The Effective Executive," management guru Peter Drucker observed that, "Efficiency is doing things right; effectiveness is doing the right things." In context, he noted that for manual work, efficiency was sufficient. In the 1960s, Drucker also differentiated between the manual worker and the "knowledge worker." He opined that for "knowledge work," effectiveness is more important than efficiency.
Somewhere, lurking in the back of our (now) voluminous knowledge about the voluminous health care law is the understanding that one of the goals of the Patient Protection and Affordable Care Act (PPACA) is to improve "the quality and efficiency of health care." This may have begun with funding for comparative effectiveness research under the the American Recovery and Reinvestment Act, but a new initiative, crafted in the vacuum of Washington, D.C., is beginning to raise more questions than answers.
Medicare will soon begin tracking a statistic known as "Medicare spending per beneficiary." At its core, this seems like an innocuous and rather straightforward proposition. In fact, one wonders why the government has never tracked the cost per beneficiary. Yet this proposal -- just as so many others in recent legislation -- was crafted by people who generally know as much about medicine as a fish knows about riding a unicycle.
The recent health reform path is littered with such examples. The high risk pools were originally too expansive and then, as passed, too expensive. Faced with dinky enrollments, Health and Human Services has just artificially lowered the costs in an effort to attract more participants. They couldn't have accomplished this by decreasing the spend, since PPACA did virtually nothing to alleviate health care delivery costs. Yet, they could have avoided this problem if they had listened to the professionals -- the agents, brokers and associations that represent us.
The government rails about the cost of insurance, but when we tried to give it the facts about how real markets act, it didn't want to listen, driven instead by the pathological need to attempt to impose ideological constructs on markets. We attempted to voice our knowledge about economics -- OK, really just mathematics -- but our advice fell on deaf ears. When your kids bring last-minute dinner guests, you either make more food or the portions get smaller. But many in government believe there is some legislative legerdemain where more food (at lower costs) just materializes. Sadly, as is the case with "magic," it is just an illusion.
Medicare spending per beneficiary has hospital professionals wondering if they have been transported to another universe. Under this plan, hospitals would be held accountable for the cost of care they provide. That's all well and good, but they would also be responsible for the cost of services generated three days before a hospital stay and (I am not making this up) 90 days after the stay. It doesn't matter that those pre- and post-hospitalization costs may be from non-hospital providers, the smart folks in government are going to hold the hospital accountable.
Someone once suggested that if you want to frustrate a human being, you need only make them responsible for something over which they have absolutely no control. By that definition, there's going to be a lot of frustration over this new regulation. Charles Kahn, president of the Federation of American Hospitals, is foursquare in favor of paying hospitals according to their performance. But he believes the administration was "off track" on making hospitals accountable for the pre- and post-hospitalization expenses. "That's unrealistic, beyond the pale," Kahn told the New York Times. Ignoring the experts
Why, one wonders, is it so difficult for legislators to heed advice from those who actually know how things work? First, many of those who make these laws have never worked in a "real" business (defined as anything other than politics). Secondly, they are constantly running for re-election, so the temptation is to create this populist junk regulation. To do that, they need a villain to oppose, and (as they see it) you can't really invite the villain in for tea and ask them to help you craft a campaign to impose a sea of stupid regulation on them. Moreover, these regulations almost never solve any real world problems. In fact, they usually make things worse.
Economist and columnist Thomas Sowell writes, "Much of the social history of the Western world over the past three decades has been involved with replacing what worked with what sounded good. In area after area -- crime, education, housing, race relations -- the situation has gotten worse after the bright new theories were put into operation. The amazing thing is that this history of failure and disaster has neither discouraged the social engineers nor discredited them."
Medicare spending per beneficiary may create a result that is even more unbelievable than asking hospitals to be accountable for care they do not render: care of which they may not even be aware. The initiative may hurt the very constituents who were used as a cudgel to help pass PPACA. According to Kenneth Raskey, president of the Greater New York Hospital Association, the current plan, "tends to discriminate against inner-city hospitals with large numbers of immigrant poor and uninsured patients."
According to the New York Times, administration officials are aware of the concerns that some hospitals might try to increase their performance measurements by avoiding high-risk patients. The officials said they would "watch closely for signs of such a problem." It is comforting to know that at the same time the new law is creating more insured individuals and those folks are creating more demand, those most at risk may find it increasingly difficult to receive care. Way to go, Congress... way to go!
As I wrote in an op-ed published in the Miami Herald, "Much of the Washington rhetoric originates in flawed premises and faulty logic based on the hope that big government will, for the first time, be efficient and responsive to the needs of our citizens. The impact of the decisions made in Washington will not be fully understood until months or years after the debate has concluded." No, I wasn't channeling Nancy Pelosi, I wrote that about the Clinton health care initiative in 1993. Apparently, the medicine our government still needs is a dose of reality.
