Can collaboration heal rising medical costs?

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Medical costs are rising dramatically. Few consumers would dispute that.

The U.S. government spent more than $2.3 trillion on healthcare in 2008, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 1980—all according to the Kaiser Family Foundation.



Since 1999, family premiums for employer-sponsored health coverage have increased by 131 percent,  far outpacing inflation, and placing an increasing cost burden on workers. And with workers’ wages stagnating many simply can no longer afford medical care.

Who is to blame for these steeply rising costs?

Is it patients who fail to consider the cost consequences of poor eating habits and are unwilling to get off the sofa and exercise?

Is it physicians who neglect to practice evidence-based medicine and order excessive tests?

Is it hospitals that want to fill beds and aggressively market technology and treatments that patients often do not need? And then charge $5 for every baby aspirin?

Is it greedy insurance companies that care only about making money (lots of money) for their shareholders and senior executives?

Is it drug companies that hoard drug patents and aggressively market their most expensive drugs and then engage in “profit-sharing” with the doctors and hospitals that prescribe the drugs?

Is it lawyers that take a hefty percentage of any awards from malpractice suits and leave patients with only the amount the insurance company would have originally paid?

This is all exaggeration and oversimplification, of course, but the real question stands: How do we curb these rising costs? With so many things to consider, it's easy to get discouraged. How do we even get started?

Blue Cross and Blue Shield of North Carolina (BCBSNC) is trying to start this conversation with a newly launched website, Let's talk cost. They have challenged all groups in the healthcare system--including health insurers--to stop looking for scapegoats and start working together to rein in medical costs.

Commercials running in prime-time entice American Idol watchers to get online, and check out the site. The website is meant to get various industry entities, as well as everyday consumers, involved in a discussion that could ultimately help reign in medical costs. Company President Brad Wilson said the website will offer an "open forum where real unfiltered discussions can happen."

But, as the Raleigh News & Observer has reported, "Consumers are incredibly skeptical of Blue Cross." Adam Linker, a policy analyst at the N.C. Justice Center's Health Access Coalition, and a frequent critic of the insurer, went on to say, "Blue Cross is going to have to be part of the solution, but when [consumers] hear Blue Cross talking about cost control, they worry it means Blue Cross is trying to keep more money for itself."

The site is seeing a fair amount of activity so it remains to be seen whether consumers will accept the invitation to conversation from BCBSNC and jump in.

Because this is such a contentious conversation, it helps to insert a little humor to get people to consider different perspectives. The website has some pretty funny advertisements--featuring live goats--that portray the various scapegoats of the healthcare debate, including insurance companies, doctors, pharmaceutical companies, lawyers and individuals. My favorite is the Doctors commercial.

Humor aside, the message here is that everyone--including BCBSNC--must take responsibility for finding solutions. We must all work together to rein in medical costs so that we all can afford medical care.  



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Lori Mehen
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Lori Mehen is an Account Manager in Brand Communications + Design at Red Hat. She grew up in Los Angeles, CA and now resides in Durham, NC with her husband and three kids. Lori enjoys water skiing, cooking and car racing.
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Michael B. | April 16, 2011
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The problem with healthcare is that there's so much government intervention in the market that they broke the price mechanism, causing an inflationary spiral. If they want to lower cost, they'll have to end some of the intrusions. Rolling back the power and scope of the FDA would be a great start. They should also end medical licensing and prescription requirements for drugs. It essentially is a mechanism that transfers income to wealthy doctors by artificially decreasing the supply of The problem with healthcare is that there's so much government intervention in the market that they broke the price mechanism, causing an inflationary spiral. If they want to lower cost, they'll have to end some of the intrusions. Rolling back the power and scope of the FDA would be a great start. They should also end medical licensing and prescription requirements for drugs. It essentially is a mechanism that transfers income to wealthy doctors by artificially decreasing the supply of healthcare providers while artificially increasing demand. Collaboration can only save so much money, but collaboration could help ease us into a situation where we could do away with the prescription because our pharmacist could have access to our health records. This would mean they could warn us about taking certain medicines because they might interact with medicine we are currently taking. This job is currently done by doctors. Patents last too long (20 years), but it might be best to use lowering the patent duration as a bargaining tool to get other countries to do the same. healthcare providers while artificially increasing demand. Collaboration can only save so much money, but collaboration could help ease us into a situation where we could do away with the prescription because our pharmacist could have access to our health records. This would mean they could warn us about taking certain medicines because they might interact with medicine we are currently taking. This job is currently done by doctors. Patents last too long (20 years), but it might be best to use lowering the patent duration as a bargaining tool to get other countries to do the same.

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Greg P | April 18, 2011
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So many people think they know what "the" problem is, but there are many problems associated with the cost of health care. I'm a physician, and it seems that many are quite eager to point at doctors as the source of the problem, yet we are highly regulated, have to abide by a number of rules, are expected to take care of people whether they have insurance or not, whether we might get paid or not.
We have "billable" things that we do, visits, procedures, but a lot of other required things are not, so a good part of a doctor's day is spent on these unbillable things.
People seem to value their health only when they need health care of some kind. If they're healthy, of course there's no need for routine doctor visits, of course there's no need for health insurance. And we do see these people. What do insurance companies say when someone is sick and then wants to buy health insurance?
So how much money should a doctor make? Hard to say, but I do know that a doctor makes money by delivering care, which means to make more money I have to do more.
Contrast that with an insurance company, or an insurance company executive, who makes money by denying people care, and is most happy when he can take your money and give you nothing for it, meanwhile begrudging doctors who work to make people well, because that means he has to give up money he wanted to keep.

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Michael B. | April 19, 2011
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I want to clarify that in my previous comment, I wasn't blaming doctors or that they should have their pay cut. I think that their pay should be determined by the free and open market. The "breaking" of the price mechanism was actually caused by the combination of existence of Medicare, Medicaid, utility-like insurance provided by employers, and patients being treated regardless of their inability to pay. While I'm not suggesting that these things should all be taken away, I do think that some of the government-induced market failure which raises prices by itself could easily be corrected without any additional cost to taxpayers. The reason that the price mechanism is so important is because it determines how both consumers will spend their money and what they will purchase. Producers also use it in determining what goods and services to provide and how to invest money. Right now, a massive percentage of money spent by the the healthcare industry is being misallocated because of the economic distortion. One obvious example are drugs like viagra. In a free market, the less investment dollars would have gone toward drugs like viagra and more would have been instead invested things that would save lives, cut costs, improving quality of life in a more meaningful way, etc. Also, medical and pharmaceutical industries have had far less pressure to innovate in the area of cost cutting which would have make health care much more affordable. In a free market, people wouldn't need health insurance to afford healthcare. The need for insurance itself is caused by all of the distortion. Focusing on "fixing" insurance is like putting a band-aid on someone with internal bleeding.

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Greg P | April 19, 2011
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I don't think there are any simple solutions. I'm not sure that collaboration as this article suggests, is by itself very helpful. We physicians have a memory of various "collaborative" efforts which were either accompanied by threats or simply some bludgeoning with more and more paperwork, reduced fees for what we do, in the name of improving health care but really generated to reduce someone else's costs. We see time and again that a good year for insurance companies results in no reduction in premiums for insurance, but ever higher bonuses for execs. After all reducing premiums would argue against that mantra that health care costs are rising, and the only direction for premiums to go is up.
I think the starting point needs to be to set up a series of principles by which we all agree that the public is properly served in getting health care.
One might be that the purpose of health care insurance is the delivery of health care, not paying executive bonuses, not dividends for stockholders, not seeing how far premiums can be pushed upward.
Another might be that people take more responsibility for their own health, starting with the requirement that people purchase health insurance for themselves and their families.
As far as physicians, it's hard to create some sort of market effect on what doctors make without some sort of simplification of the payment process. As it is now, I may be compelled to deliver care even when there is uncertainty about whether I will get paid, or a certainty that I won't. We have this game of "my charges are $$$$ but there is a deductible/withhold/contract reduction of $, so I get $$$. And payor A pays X, payor B pays Y, and Medicare pays Z, all for the same service. Medicaid tries very hard not to pay at all.

So I think there is a lot of education that is needed about how the money flows with healthcare, to see all the craziness.

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Gary Scarborough | April 20, 2011
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There are many things that are needed to make our health care system work. Many of them are things that we as Americans have been trained to go against, some are so easy they are common sense.

1. I have long believed that health care should be non profit. I am not talking about the doctors themselves, or the nurses and countless others. I am talking strictly about drug companies and health care systems that this country has. Health care should be a public utility. We all want health care. And currently, we give health care to everyone whether they have insurance or not. So why target the drug companies? Well when companies spend more money on advertising a prescription only drug than they do on research, are they really looking out for the customer? After all, only the doctors really need to know about the new drugs, since they are the ones that write the prescriptions. Also, most drugs that are developed by drug companies (like 80%) offer no new or negligible value compared to the drugs already on the market. For drug companies, there is a conflict of interest in developing cheap cures. They don't make money on them. Compare that to an expensive treatment that will keep the unhealthy coming back for a long period of time. Is it really a drug companies best interest to find cures or treatments? As for insurance companies, it is in their best interest to deny coverage as much as possible. This is so common place that movies have been made on cases of this abuse.

2. Health care should be paid out as part of our taxes. Once you eliminate the price gouging of drug companies and insurance companies, it gets a lot cheaper to just pay for all the health care costs in the country. Everyone then pays their share as a percentage of their income. Nobody has to do without because they lost their job or had an accident and can't work.

3. People used to only go to the hospital if they were dying because it cost so much. But today can cost so much more to not go to the doctor. We need to educate people on getting check ups. Preventative medicine would have a huge impact on long term costs. Case in point: high blood pressure is a fairly common ailment. It is also fairly easy to regulate with the wide variety of medicines available. By taking $0.50 worth of medicine a day, people can avoid the long term problems that come from leaving it untreated. How much do you think it costs to treat advanced kidney disease, heart attacks, or stroke?

Medicine and science used to be far more open than they are today. Now we have profit mongering corporations who try to patent even the very essence of the human body(DNA). We can change, but we have to be willing to try. Otherwise the system will eventually collapse as only the very rich will be able to afford health care.

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