Friday, January 9, 2009

The Economic Burden of Standard of Care

During our life experience we sometimes make startling discoveries about the institutions and devices that we trust to protect us and benefit us. We discover that some inventions of man, usually without malice by those who implemented them, are hurting us and limiting our progression. Such discovery is normal in the medical field. We regularly discontinue medications and treatments that we discover are doing our patients harm. But sometimes we are surprised and don't know what to do with the truth when it is presented to us.

I believe that our current concept and application of standard of care is one of these long-trusted devices is harming patients. I believe that it must be reconsidered and discarded.

Standard of care consists of the care that experts would consider to be best practice. The standard of care guides physicians as they make treatment plans for their patients. The purpose for having a standard of care is to prevent patients from being mistreated by negligent or malicious medical practitioners. If a court establishes that a physician caused damage by not following a standard care, that physician can be convicted of malpractice. Despite its protecting purpose, I believe that standard of care has contributed to patients' ultimate harm. It has made and continues to make health care inaccessible to them.

To prove this point, let's look at it from an economic standpoint. We've discussed supply and demand in the past. The price of any commodity is a function of the relationship between supply and demand. When demand for commodity increases with regard to supply, the commodity becomes scarce and costs more. When demand decreases with regard to supply, the commodity becomes less scarce and costs less. Now let's examine a scenario to see how standard of care effects the relationship between supply and demand.

Let's assume that American family practitioners read in the New England Journal of Medicine that extensive meta analysis of multiple studies proves that medication XYZ is hands-down the best treatment for ear infection. Within a short time, the data is almost universally accepted by family practitioners and a new standard of care has been established. Medication XYZ is a relatively new product and significantly more expensive than older antibiotics, but a course of XYZ is now the standard of care for ear infection.

Now when the doctor sees patients with ear infections, he prescribes XYZ. It is the standard or care. The medications he used formerly are not less effective than they were. But, if he practices something other than the standard of care he will expose himself to malpractice suits if those treatments fail. In this scenario, what has standard of care done to the price of health care?

First of all, the price of treating ear infections has gone up because the medication used is more expensive. Patients paying cash will feel that cost immediately. Patients on insurance may not immediately feel the change, but they notice it when their insurance premium goes up the following year. Those receiving government assistance may not recognize the change, but everyone's taxes will go up because of it.

Doctor's dedication to the new product will have some effect on the relationship between supply and demand as well. Because doctors are now universally using the XYZ, demand rises dramatically with regard to supply. Scarcity will increase and prices will go up. And so the cost of treating an ear infection has gone up for two reasons: first, because the new standard of care calls for the use of a more expensive medication and second, because the standard of care has created a demand for the product that has driven up its price.

The above scenario characterizes a complex process, but accurately summarizes what may be the leading cause for the rising cost of health care over the last thirty years. Standard of care, a device meant to protect patients from negligence and malice, has made health care unaffordable and inaccessible to them.

What must we conclude then, is it economically impossible to provide Americans with good health care? We've shown that if all doctors use the hottest new medications, the price of health care will continue escalating. Does supply and demand require that quality health care be reserved for the few?

Our problem does not lie in seeking the best health care. It lies in dictating “the best health care” and then force feeding it to Americans. “Best care” cannot be dictated to doctors. Doctors cannot dictate it to patients. Doctors should exert themselves to stay abreast of the latest studies and the best data. They should be held responsible if they do not provide truthful and complete information to their patients. Patients will choose from doctor recommendations a treatment plan that that suits their needs and their budget. They will determine the best care.

I believe that the current concept of standard of care is harmful, both to America as a whole and to patients as individuals. I believe that it does not protect patients, but makes health care inaccessible to them. Consensus of best practice as seen in standard of care has gone too far in bridling physicians and their patients. Freedom must be maintained in all fields, especially health care. As we jettison obstacles to this freedom, American health care, the very best health care in the world, will become accessible to all American citizens.

Rusty Scalpel


Rusty Scalpel said...

One reader asked me if a consensus method should be abandoned in the research field. He wondered if I disagreed with doctors coming to a consensus of the best care for a given health condition given the current research.
I see no problem with doctors working together to establish which practices are most beneficial for their patients. In other words, I have no problem with a standard of care being established. However, when making care decisions, doctors should be more responsible to patients and their needs than they are to those standards. Patients should be the ones that ultimately choose the treatment course and they are not responsible to those standards.

Terra said...

Please watch the video on CBS News Headlines: Insurers Acussed of Underpaying Patients

The report demonstrates one of the many reasons why health care is too expensive for our patients.


Maytag said...

Dave your link does not seem to work. Try reposting it. Thanks.

Maytag said...

My apologies, it seems I was not copying the whole link properly. d

Rusty Scalpel said...

I got this in an email from Cato:

Dave, I watched that video link that you posted on FMP and read your comment. To share my opinion with you. I would argue, (like Stossel) one reason why our healthcare is so expensive is because of the lack of competition. John Stossel did a great 20/20 episode on this very topic. If you get some time you should watch it -it's called "Sick In America". I think that the video you shared promotes the popular idea that insurance companies are always trying to get out of paying anything, which is not always the case. I'm hesitant to demonize health insurance companies as it could reinforce a notation that making money off of sick people is bad. The video clearly pointed out a conflict of interest and showed how the company corrected it's course - they did this because they didn't want the word to get out and lose business. This is a classic example of a market correcting itself.

Rusty Scalpel said...

Rusty Scalpel said...

I received an email asking how the standard of care is developed, whether it is voted on, etc. The email asks whether a New England Journal of Medicine article could bring about a change in the standard of care.

If anyone can answer better than I can, feel free to comment. Standard of care is not a universal, set in stone, published guideline. The standards of care evolve over time and are affected by studies, by guidelines established by professional organizations, and current practice. The standard of care is what would be generally considered to be best practice at a given point in time.

That being the case, a New England Journal of Medicine article could rapidly change the standard of care. It is considered one the most authoritative medical publications and if it published some sort of meta-analysis (where lots of different studies are analyzed to come up with a common conclusion) doctors would pay attention. In my piece, I used it only as an example, but it definitely carries the weight to bring about a change in the thinking of doctors.

Where standard of care really comes into play is in the courtroom. Expert witnesses are used to establish the standard of care (doctors are brought in to tell the court what they consider the standard of care to be). The doctor on trial will not be considered negligent if he has followed what the majority of physicians would consider to be standard of care OR what a respectable minority of physicians would have considered standard of care in similar circumstances.

To tie it together, to my understanding physicians practice the standard they consider to be widely accepted. However, they keep in mind that any treatment decisions they make must be considered legit by potential juries. This tempers their treatment decisions, discouraging individualism and adaptation to individual patients circumstances. I believe it brings about a poorer quality of health care.

Terra said...


I've watched the videos on ABC by John Stossel. To clarify my comment, I wasn't stating that insurance is bad or that making a profit is wrong. I was simply stating that when insurance companies underpay patients, then the patients are left with the cost. Many of the videos on the website are not favorable toward insurance companies.

In general, all insurance companies that don't follow ethical codes of conduct will add to the consumers cost: I have had an unfavorable experience with an insurance agency that I needed to threaten in writing with being reported to the state before they would pay me for my losses (for damage to my condo).

Curious question to all readers: What is your position on Medicaid? It is a branch of government insurance.

Rustin said...
This comment has been removed by the author.
Rustin said...

Dave brings up an interesting question. What is the position of readers and contributors on medicaid? Is this a site for mere rhetoric or is there some substance to the ideas expressed here?

Rusty Scalpel said...

Dave asked about FMP's position on medicaid. I think I've said about all I want to say about it in the post titled Resistance to Federal Assistance found in the Free Market Physician Essentials Sidebar.

Rustin (great name, by the way) asked about the position of the author and readers on Medicaid- I would defer that question to the above-mentioned post as well, at least for my opinion. He also asks whether this site is a place for mere rhetoric or whether there is substance to the ideas expressed here.

I looked up the word rhetoric to make sure I answered correctly. This is a site for rhetoric in the sense that it uses communication persuasive. It is not rhetoric if rhetoric is taken to mean insincere or grandiloquent speech. By substance, I assume Rustin asks whether we take action based on our ideals.

With regards to medicaid, I have written little about it. I've encouraged readers to consider that they might find more value in market health plans than they do in federal plans. I would hope that our entire discussion encourages self sufficiency and financial independence.

Aside from those points, I don't know if I will say much more about medicaid, at least for now. I think the system is critically flawed, but I see no way the federal government can immediately replace it or significantly improve it. However, I have not put much thought into government action.

What I will say, however, is that I hope that through our efforts health care will become affordable to all Americans. I truly believe that by using true economic principles and by honoring the principles of American freedom we can make health care affordable. The solution lies in economics. Any commodity can be made affordable. When that is the case with health care, there will be little need for cumbersome federal aid programs in the health care field. Medicaid will then be obsolete.

Rusty Scalpel

Michael said...

The ear infection case brought to memory what I faced in the nineties as a moonlighting ER physician. I was approached after coming to work one day, by a concerned nurse. There had been a child brought in with simple otitis media. His parents were given a prescription for Augmentin. The parents, allegedly, called back requesting a change in medication. You see, they lived in the Mississippi delta region. Like many others living there, they had no insurance and no way to pay for the $100+ prescription. The nurse approached me because she knew I listened to people! The previous doctor refused to change the medication. So, as result of his actions, the child was going to go untreated! (Arrogance in its best form!) I told the nurse to change it to Amoxil and tell the parents if the infection was not better in 48 hours to be seen again!

As I sit here, in a pensive mood, I remember many other outrageous behaviors that contributed to poor patient care! Who make the decisions now anyway? It seems that one will always be second guessed by others, even your competition! One problem arises, when those decision makers are also your competition! But we all know that those doctor/scientist/politicians would never let their personal feelings dictate their actions in the, health care, political arena! NEVER! ;P

p.s. Back then, one could get in trouble for "sending a patient home too soon" or "not doing enough lab work post-operatively" or doing to many of the surgical procedures in my private office! Believe me, what was thought to be good medicine during medical school and residency, out in the trenches, was called crazy by many of my esteemed fellow practitioners. I do not envy the young doctors just completing their training!