Bariatric Surgery on the Health System

Today I learned about a doctor group in Ohio that is advocating for a law to eliminate insurance companies’ wanton (and almost unrestricted) refusal to deny reimbursement for various health services. I applaud these efforts; but, I think their focus would lead me to categorize them as bariatric surgeons of the health system.

Bariatric surgery, A.K.A. weight-loss surgery, is criticized as (to reference Thoreau) hacking at the branches of evil rather than striking at the root. The root cause of obesity (in most cases) is a suboptimal diet and insufficient exercise. But, instead of going through painful lifestyle changes to solve the root of their obesity problem, people can now get bariatric surgery instead. (I should say here and now that I don’t think bariatric surgery is all bad–it has its uses, many of which are wonderful and important, as do advocacy groups such as the one spoken of above.)

How does this relate to the work being done by that noble doctor group in Ohio? They’re trying to contain the ill effects of an underlying incentive in the health system rather than change that underlying incentive that is causing insurance companies to seek every way possible to limit medical loss. (“Medical loss” is the term health insurance companies use to refer to their money they spent on paying healthcare providers for services rendered.)

What is this underlying incentive that insurance companies are rationally (yet probably unethically) responding to? They get paid more for spending as little as possible on health care. Instead, they need to get paid more for keeping patients healthy. If that incentive were to be changed, the whole issue of reimbursement denials would be solved.

Even “pay for performance” is another, more sophisticated form of health-system bariatric surgery–providers would naturally invest much more time and effort (e.g., investing in EMRs, crafting policies to help physicians more closely adhere to clinical guidelines, perform research in ways to reduce complication rates and hospital re-admissions, etc.) to find every possible way to keep patients healthy if it meant they would be more profitable as a result of it.

So, how can a payer get paid more to keep patients healthy? Integrated systems. Capitation. There are ways, but this post isn’t about the solutions so much as it is about understanding the causes of the problems. Sorry.

UPDATE: Another way to look at this would be using the carrots and sticks metaphor. Right now, our main way to negate the ill effects of bad underlying incentives in healthcare is by using sticks to punish the natural responses to the incentives the system provides. Using sticks is prone to getting “gamed” (i.e., people find ways to avoid the punishment without actually doing the desired action). Carrots, on the other hand, provide good underlying incentives (assuming the carrot is well-aligned with what we really want health-care providers to be doing for us), and they stimulate creativity to find more effective ways to get them.