If we want a health system that is effective, efficient, and innovative, we need to have prices that transparently and accurately reflect the real costs of providing care. This would include all costs, including what the physician Chavi Karkowsky (quoted below) calls “administrative costs.” If we do not take account of the patient’s administrative costs, we will have a system that is ineffective, inefficient, and stagnant. And we will have set up perverse incentives that block entrepreneurs from improving the system. A true accounting will reveal higher costs, and that will raise concerns about too limited access to health care. But true prices also will provide information and incentives for medical entrepreneurs to find lower-cost ways to make health care more effective and more efficient. In the short-term, concerns about access could be addressed by a health care voucher system, analogous to what Milton Friedman proposed for education, or by a health insurance system like that proposed by Susan Feigenbaum.
Several years ago, I was called urgently to our small obstetric triage unit because a pregnant patient was very sick.
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Within minutes, a team was swarming the triage bay — providing oxygen, applying the fetal heart rate and contraction monitor, placing IVs. I called the neonatal intensive care unit, in case labor progressed, to prepare for a very preterm baby. In under an hour, we had over a dozen people, part of a powerful medical system, working to get her everything she might need.
Breathing quickly behind her oxygen mask, my patient explained that she had noticed symptoms of a urinary tract infection about four days ago; she had gone to her doctor the next day and had gotten an antibiotics prescription. But the pharmacy wouldn’t fill it — something about her insurance, or a mistake with her record. She tried calling her doctor’s office, but it was the weekend, and she couldn’t get through. She read on the internet to drink water and cranberry juice, so she kept trying that. She called 9-1-1 in the middle of the night when she woke up and felt as if she couldn’t breathe.
This is the story of our medical system — quick, massive, powerful, able to assemble a team in under an hour and willing to spend thousands of dollars when a patient is sick.
This is also the story of a medical system that didn’t think my patient was worth a $12 medication to prevent any of this from happening.
This patient’s story is a result of the space between the care that providers want to give and the care that the patient actually receives. That space is full of barriers — tasks, paperwork, bureaucracy. Each is a point where someone can say no. This can be called the administrative burden of health care. It’s composed of work that is almost always boring but sometimes causes tremendous and unnecessary human suffering.
The administrative burden includes many of the chores we all hate: calling doctor’s offices, lining up referrals, waiting in the emergency room, sorting out bills from a recent surgery, checking on prescription refills.
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There’s a general sense that all that unpaid labor required to get medical care is increasing.
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At the same time, creating administrative burden is a time-honored tactic for insurance companies. “When you’re trying to incentivize things, and you don’t want to push up the dollar cost, you can push up the time cost,” said Andrew Friedson, the director of health economics at the Milken Institute.
Administrative burden can work as a technique to keep costs down. However, part of the problem, Dr. Friedson said, is that we don’t count the burden to patients, and so it doesn’t factor into policy decisions. There’s nobody measuring the time spent on the phone plus lost wages plus complications from delayed care for every single patient in the United States. A recent study co-written by Michael Anne Kyle, a research fellow at Harvard Medical School, found that about a quarter of insured adults reported their care was delayed or missed entirely because of administrative tasks.
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One of the first steps to any comprehensive solution would be a true accounting of the costs of administrative burden. Maybe we in the medical system do have to start counting up the hours patients and providers spend on the phone, in waiting rooms and filling out forms. That would be difficult: It’s not a metric the health care industry is used to evaluating. But it’s not harder than doing the work itself, as patients do.
For the full commentary, see:
(Note: ellipses, and italics, added.)
(Note: published in the online version, but not the print version, of The New York Times.)
The recent study co-authored by Michael Anne Kyle and mentioned above is:
Susan Feigenbaum discusses her proposed health insurance system in:
Feigenbaum, Susan. “Body Shop’ Economics: What’s Good for Our Cars May Be Good for Our Health.” Regulation 15, no. 4 (Fall 1992): 25-31.