Is America Ready for Assembly Line Medicine?

Published by clickbroker.blogspot.com.

While Cigna (CI), Humana (HUM), UnitedHealth Group (UNH) and WellPoint (WLP) are too timid to ask, The Wall Street Journal’s “The Henry Ford of Heart Surgery”, subtitled “In India, a Factory Model for Hospitals Is Cutting Costs and Yielding Profits” reports that foreign entrepreneurs have found success. The American model of one or more generalist hospitals in every two-bit town has given way to extremely large regional specialty hospitals in India.

The question becomes what, if anything are Americans willing to give up for improved quality and lower costs? We currently have a model of regional trauma centers for real emergency care, with a fleet of medevac helicopters on standby for car accidents and earthquakes. But we are so far unwilling to travel for non-time sensitive heart or cancer operations. (Operations that can wait from one week to a month or more.)

Despite all the rhetoric about the strain on the current stock of doctors and medical facilities that expanding health insurance will exert, our current facilities are severely underutilized. Why else would doctors, hospitals and pharmaceutical companies be relentlessly advertising? If Medicare was so severely underpaying doctors and hospitals, why are they fighting for senior patients?

The answer is that they need to fill their offices and beds. As Willie Sutton said when asked why he robbed banks “"because that's where the money is.” Seniors and Medicare is where the money is – virtually all the money.

Dr. Devi Shetty runs the 1,000-bed Narayana Hrudayalaya Hospital in India that performed 3,174 cardiac bypass surgeries in 2008. Unlike the US, the 42 staff cardiac surgeons perform two to three operations per day, six days a week. The surgeons earn $110K to $240K per year depending on experience, and the hospital has complete diagnostic services in-house. Skills increase with concentration in these types of specialty hospitals.

Dr. Jack Lewis, chief executive of the American College of Cardiology confirmed Dr. Shetty’s model. High volume increases quality. Dr. Shetty cites the Japanese manufacturing model of continuous improvement. "In health care you can't do one big thing and reduce the price," Dr. Shetty says. "We have to do 1,000 small things."

The average $2,000 price Dr. Shetty charges for an operation might not be replicable here when Americans are charged anywhere from $20K to $100K. But there is no reason why the free market shouldn’t push toward more regionalization and specialization of medical services.

Not even the staunchest conservative would argue that America actually has a free market in healthcare. We have a hybrid market where inefficient providers are protected and consumers are reluctant to be shifted from doctor to doctor as they work their way down the medical assembly line. Doctors too are reluctant to give up patient dollars to more efficient operators. Insurers are also guarded in paying to transport patients to the most efficient and highest quality facilities.

Just as it is far cheaper to conserve energy than build more power plants, it is far cheaper to shutdown inefficient local hospitals and expand regional facilities. With the expansion of computerized medical records, I see little benefit to a patient having a personal doctor, much less a personal surgeon. Have there been any clinical studies showing the benefits of long-term doctor patient relationships?

The last issue might be the value of having family and friends close by, able to visit hospital patients often. Spouses might have to work while patients are hospital bound. Insurers could find that it is cost effective to pay travel and lodging expenses for family. Alternatively, clinical trials might find that family visitations have no affect on outcomes. There is always the telephone.

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