Enough blame to go around

Are profits bad in health care?

Several of my readers have asked me this question in response to my recent posts on the profits of hospitals and health insurers, as well as the pay of physicians.

My answer?

Absolutely not. If hospitals, doctors, insurers, nursing homes, drug companies and others are making money while also meeting the needs of patients, that’s a fair reward for their good work. And if the results are outstanding, there’s no reason in my mind that health care profits can’t be quite large.

But, if health care organizations are failing to meet patients’ needs, and yet are being rewarded financially for it, then that’s a problem.

Yet that’s what happens, on a broad scale, in Indiana’s health care sector. Costs and profits run higher in Indiana than the rest of the country while patient outcomes and provider quality (in key areas) are worse.

Those facts were made painfully obvious on Wednesday when the Commonwealth Fund released a trove of data on each state’s health system. It includes enough to indict everybody in Indiana—hospitals, doctors, insurers, state policymakers and, perhaps most of all, Hoosier residents.

I don’t put much stock in the Commonwealth Fund’s ranking methodology (it generally ranks states based on how closely their health systems resemble the Fund’s preferred policies, which may or may not be the right policies for Indiana.) Needless to say, Indiana didn’t rank well—No. 43.

But the 46 different metrics that undergird the Commonwealth Fund’s rankings are a fascinating view into the problems in Indiana’s health care system. Here is my summary:

Spending is higher in Indiana than the national average.

1.    The federal Medicare program spends 4 percent more per senior in Indiana than the national average, even after Medicare spending was adjusted to account for differences in wages and supply costs across the country and when Medicare’s spending for teaching and treating low-income patients was removed. In 2012, Medicare spent $9,221 per senior in Indiana, compared with a national average of $8,874.

2.    Private health insurance premiums are 8 percent higher in Indiana—at $5,871 for single coverage, even after the regional cost variations were taken out. A chunk of that is, as I wrote two weeks ago, the higher profit margins health insurers earn in Indiana versus other states.

Hoosiers’ health status is worse than the national average.

1.    A key reason for higher health care spending in Indiana is poorer health among Hoosiers. Slightly more Hoosier adults than their peers across the country die from breast cancer, colorectal cancer and suicide. And significantly more Hoosiers smoke and are obese. With those kinds of needs, it’s no wonder they rack up higher bills on health care.

2.    Also, public health looks pretty bad in Indiana, where infant mortality is significantly higher than the rest of the country. Dr. Bill VanNess, the state health commissioner, is working on attacking this terrible problem, which has dogged Indiana for quite some time.

3.    The kicker for me on health status is the percentage of working-age adults that are missing six or more teeth. Indiana is tied for 10th worst among states, at 13 percent. The national average is 10 percent. West Virginia leads in this Hillbilly Index, at 23 percent.

The overall quality of Indiana’s health care system is at best average and, in key areas, below-average.

First, let me say what I’m not saying: I am not claiming that any individual clinician or even any category of health care provider is below average in the specific services they deliver. On measures like hospital mortality rates, 30-day readmissions, giving patients discharge instructions and other measures of quality, Indiana was at or, in some cases, a point or two better than the national average.

What I am claiming, based on the data in the Commonwealth Fund report, is that more Hoosiers suffer preventable deaths and hospitalizations than Americans on average. So while Hoosiers’ poor health status means they need more care and spend more for it, in too many cases, they are not receiving the care they need until things reach a crisis—or until it’s already too late.

1.    Hoosiers die from preventable conditions 8 percent more often than Americans overall. The Commonwealth Fund reports “mortality amenable to health care.” That’s number of people that die from one of 33 different causes before age 75 (or as a child, for some of the causes). Each of the 33 conditions, which include some infections, some cancers, diabetes, hypertension, influenza, pneumonia and maternal death in childbirth, are “treatable or preventable with timely and appropriate medical care,” notes the Commonwealth Fund. In the most recent year for which data are available, 93 out of every 100,000 Hoosiers died from such causes, compared with 86 per 100,000 nationally. Both rates have come down in recent years, but it has been coming down more slowly in Indiana, and Indiana has consistently exceeded the national average. This is a failure of patients, providers and policymakers to get Hoosiers the care they need when they need it.

2.    Preventable emergency room visits are higher. For every 1,000 Medicare patients, Indiana sees 200 preventable ER visits each year, about 8 percent higher than the national average of 185. Such visits are, in many cases, the most expensive way to care for a patient.

3.    On a similar theme, 10 percent to 20 percent more Medicare patients in Indiana are hospitalized for conditions that can be treated in an outpatient (read: cheaper) setting, such as a doctor’s office. Medicare calls these “ambulatory care-sensitive conditions,” and they include long-term diabetes complications, leg amputations for diabetics, asthma or chronic obstructive pulmonary disease, hypertension, congestive heart failure, dehydration, bacterial pneumonia, and urinary tract infections.

As one counterpoint to this trend of over-hospitalization: Indiana saw 13 percent fewer hospital admissions for pediatric asthma. However, there were a fewer other concerning trends.

4.    Fewer “older adult” Hoosiers are receiving the recommended preventive care—37 percent in Indiana versus 42 percent nationally.

5.    Fewer “at-risk” adults have had a routine doctor’s visit in the previous two years—83 percent in Indiana versus 86 percent nationally.

6.    About 9 percent fewer Hoosier children have received all the recommended vaccinations, compared with their peers nationally.

What all these numbers say to me is that too many Hoosiers fail to take care of themselves and seek out care before they develop big health problems. It also says to me that health care providers, in general, are failing to reach outside their bricks and mortar locations to connect with patients before problems become major.

And health plans—both public and private—are failing to incentive both patients and providers to do better. As a result, those health plans—and the people they cover—are paying more for health care than they should be.

So let me circle back to where I started. In the midst of such broad dysfunction—on the part of Indiana’s patients, providers, payers and policymakers—I think the profits of health care entities can be criticized—and fairly so.

When the state of health in Indiana is this much worse than the rest of the country, it is not good that the Indiana health care system is making better profits than the rest of the country. Because it provides no incentive for anyone to change things for the better.