By Jim Thompson,
Exec. Dir. Oregon State Pharmacy Association
With another session of the Oregon Legislature complete, major emphasis was on healthcare where results showed the more effort government puts into healthcare reform the more the pattern stays the same. As we tilt at windmills in moving toward universal healthcare, one pattern stands out above all others—the continuous and disproportionate rise in healthcare costs as compared to the overall economy. Perhaps it is time to look at health care reform in a more analytical light.
The one “accomplishment” in many years of “reforming” healthcare has been to build a monstrous pile of bureaucratic red tape interfering with the doctor patient relationship and continuously driving costs higher.
We have instituted a complex of third party payers and process managers who interfere in every area of healthcare delivery resulting in higher costs everywhere and tremendous profit to the outside players. Health insurance premiums and drug costs keep increasing while the infrastructure of delivery is eroding. The third party elements of healthcare are breaking the back of the system.
There is only one approach to sorting out the problem that has any hope of working and, in a business adverse government climate, it is the least likely to be applied. We need a thorough audit of the flow of healthcare dollars to establish where they are going and how much is going outside the patient/physician/pharmacist direct delivery network.
For instance, at a time when drug costs to the consumer are soaring we are increasingly implementing at system of outside pharmacy benefit managers whose job it is to coordinate the drug delivery system at the expense of the patient and pharmacist while siphoning off huge profits to be invested in new Mercedes. These organizations have little or no transparency but it is increasingly apparent that they are very good at negotiating price reductions from pharmaceutical companies, which they keep. They work the system for drug company kick-backs, which they keep. They restrict the reimbursements to pharmacies which are forcing many of our smaller and rural pharmacies out of business. And they restrict patient access to medications which interferes in the patient/physician relationship and often results in poorer quality care. After all of these “efficiencies” are added up they trot off to the bank with the cash they have scooped out of the healthcare system. This is not about healthcare reform—it is about cost shifting and profit taking. Take out the huge profit motive and they would all be gone tomorrow.
In Oregon and nationally we have a shortage of primary care physicians, nurses, pharmacists, and many other healthcare providers with heaviest impact in rural areas. A contributing factor in this shortage is increasingly longer work hours with decrease in pay and/or profit. Restricting access to medical care may well decrease costs overall but it is poor societal policy in the face of discussions about universal healthcare.
With the billions of healthcare dollars going out to third party operations, the new Medicaid reimbursement plan for prescription drugs will reimburse pharmacies at up to 36% less than their acquisition cost for the drugs according to the Congressional Office of Management and Budget. While this will save the government money, it will certainly force pharmacies out of business in communities with high Medicaid populations unless they refuse to fill Medicaid prescriptions. Not many businesses thrive while selling their goods at 36% less than their acquisition costs with no allowance for overhead. You would think that if the government is paying 36% less than acquisition costs for drugs the cost would go down. Government is now involved in roughly two-thirds of all healthcare spending, through Medicare, Medicaid, and other programs.
Maybe the lesson comes from history. I wasn’t that long ago that most Americans paid cash (or chickens) for basic healthcare services and had insurance only for major illnesses and accidents. The whole system was simpler and more direct and had incentives to keep the costs down. At present, most pharmacies and physician’s offices have no patients paying cash for prescription drugs and services.
When government and other parties get involved in healthcare management, the costs spiral out of control. The answer is a simpler, free enterprise system that encourages all of the players to keep the costs down. Whenever there is someone else in line to pay the bill, and outside influences controlling the system, you can be assured that the bill will be too high—especially if the process is over-regulated.
