The Ponzi artist and our health care system have more in common than we'd like to admit.
We have had a lot of talk about reliable, sustainable reductions in health care costs. "Bend the trend" has become the new mantra. So I joked to a friend that we need someone like Bernie Madoff in health care to pull off the seemingly impossible: consistent performance that "bend the trend" requires.
Convinced that someone else probably had the same idea, I went to the mother of all plagiarism prevention tools (Google) to see if anyone had used the metaphor. Well, of course someone had. Christopher Hayes of The Nationwrote a great piece saying that listening to Rick Scott (the once disgraced and now resurrected ex-CEO of Columbia/HCA, recently turned Obama health care reform opponent) was the equivalent of putting Bernie Madoff in charge of securities regulation. Funny.
But this column is not about Rick Scott spending big money to discredit health reform (maybe next time?). It addresses the more serious question (okay, not so serious): What if Bernie Madoff ran health care? What would health care look like?
Health care would grow every year, in good years and bad. Bernie Madoff was able to consistently grow in good years and bad. His investors got close to double-digit growth every single year for the last 20 years. Yet, health care has grown absolutely consistently since records began in the late 1920s at a rate about 2.5 percent above the GDP per capita. This makes Bernie look like a putz.
Clients would be very happy. People loved Bernie; they were very happy. Few complained about the service or the performance. My colleagues at Harris Interactive and the Harvard School of Public Health and I have been in partnership for over 20 years measuring public opinion and trying to make sense of it. Harris Interactive polls for 2009 show that 81 percent of Americans are very or somewhat satisfied with their ability to see a doctor whenever needed (compared with 79 percent in 1990); 81 percent are very or somewhat satisfied with their insurance benefits (up from 71 percent in 1990); and 58 percent are very or somewhat satisfied with their out-of-pocket costs for health care services (compared with 54 percent in 1990).
In addition, only 26 percent of Americans agree that "the health care system has so much wrong with it that we need to completely rebuild it," compared with 41 percent back in 1991, and down from its more recent peak of 37 percent in 2006. Bernie and health care were doing a good job, so why do we need all this change?
It would be hard to get in. "I know Bernie, I can get you in" was the mantra of the Upper Eastside elite. You had to wait to get in. So too for health care. A Harris Interactive poll, conducted for the Commonwealth Fund in 2005 among sicker adults, showed that 23 percent of Americans waited six days or longer for a doctor appointment the last time they were sick or needed medical attention, compared with only 3 percent in New Zealand, 10 percent in Australia, 13 percent in Germany and 15 percent in the United Kingdom. Only Canada with 36 percent had a worse performance than the United States. Bernie would appreciate the barriers to entry.
Make the European jet set think that Americans have the best system in the world. Bernie had all the rich and famous of Europe, the Middle East and Russia convinced that he had the best system in the world. Bernie's better off in jail than being pursued by the Russian mob around Manhattan, but they used to look up to him. So too for health care. Fox News is full of experts, like expatriate Canadians, telling tales of rationing and restriction in every health care system but the good ole USA.
Make sure rich and influential people think you are good. Bernie had all the rich and influential people infatuated with his success. In health care, every hospital I know is at the 99th percentile of consumer satisfaction, and most of the 4,000-plus U.S. hospitals are in the top 100. Even though studies show there is no correlation among all the rating and ranking measures, we see a lot of affluent, well-insured Americans believing that their local hospital is superior, and rarely do they check if there are any data to support this.
Poor people would subsidize rich people. Bernie took money from poor people's pension funds to pay for reliable returns for the rich. Health care (as I explored in my last column) actually tends to subsidize the over-consumption of health insurance and health services by the rich at the expense of the poor and middle-income folks, because of the regressive way we pay for health care and the tax deductibility of health benefits.
The people on the 19th floor would never know what the people on the 17th floor were doing. Bernie never let even his closest associates go from the main office on the 19th floor of the Lipstick building to the 17th floor, where all the shenanigans were going on. No one got to see the real books.
In health care, the folks at Dartmouth (with a little help from Atul Gawande) have emerged as the intellectual foundation of health reform. It is well deserved: They are national treasures. Based on their analysis of the threefold variation in the utilization of services among Medicare recipients across the country, Dartmouth researchers estimate we could spend 30 percent less on health care for the same or even better outcomes. President Obama and Peter Orszag are all about the Dartmouth Atlas. But, even with all this great research, we don't know the full story because we are relying on lessons learned from Medicare data.
I constantly come across paradoxes in my travels. For example, why does a prominent hospital system in Northern California show up as so cost-effective based on Medicare data when so many of the health plans it deals with believe it is price gouging on commercial patients? Or why do the very-high-performance Medicare states, such as Wisconsin, have hospitals charging three times the Medicare rates to commercial insurers? Or why do Rand studies that show all-payer inpatient data on cost and quality show little or no correlation between costs and quality either way, except for the finding that for-profit hospitals tend to be cheaper and worse? (Bring back Rick Scott?) Health care providers love to obfuscate, so we need to know the whole story. Let's do Dartmouth-style analysis with all the data and let the chips fall where they may.
There would be pay for referrals. Bernie would pay the feeder funds commission to bring him business. Atul Gawande's brilliant New Yorker article "The Cost Conundrum" exposed McAllen, Texas, where south Texas rancher/surgeons were screwing the federal government to boost the local economy by paying for referrals.
There would be self-dealing. Bernie kept it all close doing his own fake trades and dealing with his feeder-fund partners who were on the take. Self-referral is rife in American health care, fueled by frustrated doctors in search of new income streams in imaging, oncology drug administration and routine testing.
Oversight and accountability would be brushed off as meddling. Bernie had his skeptics who went to the SEC and complained, but he brushed the critics and the regulators aside as meddlers in a marketplace that was benefiting people. Many in health care are resistant to more oversight, transparency, accountability and public reporting. We avoid this at our collective peril.
Hide behind community benefit and philanthropy. Bernie was loved not just for his returns but for his good work. He was the doyen of the Jewish philanthropy circuit in New York and Palm Beach; he was adored for his compassion. Hospitals have done a good job of leading with their community benefit face. Although, I have to say I still struggle with the notion that the gap between the chargemaster and what a payer actually negotiates is community benefit. I would relabel it as "the margin we would have gotten in a world of unlimited resources paid by people so stupid or rich that they didn't bother to negotiate." Doesn't sound so good, though.
Don't have really big accounting firms as auditors. Bernie used a solo guy in a strip mall to keep his books; no Big 4 here. Who does the books in health care? Are we sure we really know what's going on? Where were the auditors in McAllen, Texas? Where were the board finance committees? How many physician corporations get properly audited? I don't know, but given that U.S. health care is larger than the entire Chinese economy, there may be some interesting stuff going on.
Finally, you'd get found out, and it would leave your customers bankrupt. Bernie got caught. Many of his investors were wiped out. Innocent people were devastated, worthy philanthropies were annihilated and lives were destroyed. In some ways, too, health care is being found out. It is certainly no Ponzi scheme, but it is unsustainable. It will bankrupt the country. It already is bankrupting individual households: 62 percent of bankruptcies were related to medical costs in 2007, according to Harvard researchers.
If something seems too good to be true, it probably is. We need to reform the health care system, and we may need to make some hard choices and some sacrifices. After all, we don't want to end up like Bernie and his clients.
Ian Morrison is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN Weekly and a member of Health Forum's Forum Faculty Speaker Service.
This article first appeared in the on August 31, 2009 in HHN Magazine online site.