Comments on: Mayo Clinic Convenes Health Policy Reform Discussions http://healthpolicyblog.mayoclinic.org/2008/03/02/mayo-clinic-convenes-health-policy-reform-discussions/ Thu, 19 Nov 2009 16:26:13 +0000 http://wordpress.com/ hourly 1 By: Randall Walker, MD http://healthpolicyblog.mayoclinic.org/2008/03/02/mayo-clinic-convenes-health-policy-reform-discussions/#comment-11 Randall Walker, MD Mon, 10 Mar 2008 20:09:02 +0000 http://healthpolicyblog.mayoclinic.org/?p=7#comment-11 The Mayo Brothers used to have a process for charging patients based on the patient's ability to pay, by using a "sliding scale"; bankers would pay more for gallbladder surgery than coal-miners. Today, such a process, if done everywhere, might skew distribution of health care resources to neighborhoods where patients have the highest income (think of the density of plastic surgeons in Manhattan). Nevertheless, having more "out of pocket" payment of health care expenses could provide a market-based mechanism to improve efficiency, effectiveness, and even safety -- let people use their own health care purchases to inform the market what is best, from the patient's perspective. In fact, costs have sky-rocketed over the past 30 years in direct proporttion to the reduction in the percent of health care that is paid "out of pocket"; the percent used to be 30 percent, now it is only 15 percent. The challenge therefore is how to make "out of pocket" payments (which we know are more effective for improving quality, value, and safety) more equitable (the way the Mayo Brothers used to charge, as on a sliding scale, based on means to pay), while doing so in a way that would "mask" the patient's actual means from providers (who would otherwise, without such masking, simply hang up their shingles in the fanciest neighborhoods, and take care only of the wealthiest patients)? -- A new method of health-care transaction,called Means-Based Health Care Currency, (which could be directly linked with computers that manage Health Savings Account payment cards that are now coming into use), would be enable patients to choose their health care and pay on the basis of each particular patient's "day's wages" (a figure readily obtained from tax returns), while paying each provider based on the "national average" of all consumer's "days wages" in the system. Any difference between the patient's "day's wages" and the national average "day's wages" would be kept in a central depository. In this way, providers would be "blind" to a particular patient's means to pay, but could still set a price for their services that they know they would get paid (i.e., representing and translating their prices, which they are otherwise free to set at any level they wish, into a national average day's wages figure); this would also enable the provider to operate their medical practices and prepare their operating budgets for new equipment, etc. -- because they know they would get paid a definite amount for each service performed. This "Means-Based Health Care Currency System" would also have the advantage of making the transaction instantly. As soon as the patient had the service, using their Means-Based Health Care Currency card (similar to a Health Savings Account Card), the amount of the service (as a function of day's wages) would be withdrawn from the patients individual account, and the provider, in turn, would be paid immediately a correspoding amoung based on the same "day's wages" -- not of the particular patient, but of the national average day's wages. To incentivize consumers to participate in such a plan, their could be a high percent of pre-tax dollars that one could place in their Means-Based Health Care Currency savings account. Thus, because the savings in such accounts would accrue tax-free, even wealthier patients would choose to participate. Moreover, all patients, regardless of income, would be incentivized to find the best value and quality and safety in the market -knowing they keep the savings they derived from good value choices. Equity, value-sensitivity, and means-blinding are all needed for sustainable health care reform I have a PDF and diagram that explains this procedure in more detail. Feel free to contact me if you would like more information. walker.randall@mayo.edu. Randall Walker, MD Consultant in Infectious Diseases Mayo Clinic Rochester, MN The Mayo Brothers used to have a process for charging patients based on the patient’s ability to pay, by using a “sliding scale”; bankers would pay more for gallbladder surgery than coal-miners. Today, such a process, if done everywhere, might skew distribution of health care resources to neighborhoods where patients have the highest income (think of the density of plastic surgeons in Manhattan).
Nevertheless, having more “out of pocket” payment of health care expenses could provide a market-based mechanism to improve efficiency, effectiveness, and even safety — let people use their own health care purchases to inform the market what is best, from the patient’s perspective. In fact, costs have sky-rocketed over the past 30 years in direct proporttion to the reduction in the percent of health care that is paid “out of pocket”; the percent used to be 30 percent, now it is only 15 percent.
The challenge therefore is how to make “out of pocket” payments (which we know are more effective for improving quality, value, and safety) more equitable (the way the Mayo Brothers used to charge, as on a sliding scale, based on means to pay), while doing so in a way that would “mask” the patient’s actual means from providers (who would otherwise, without such masking, simply hang up their shingles in the fanciest neighborhoods, and take care only of the wealthiest patients)?
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A new method of health-care transaction,called Means-Based Health Care Currency, (which could be directly linked with computers that manage Health Savings Account payment cards that are now coming into use), would be enable patients to choose their health care and pay on the basis of each particular patient’s “day’s wages” (a figure readily obtained from tax returns), while paying each provider based on the “national average” of all consumer’s “days wages” in the system. Any difference between the patient’s “day’s wages” and the national average “day’s wages” would be kept in a central depository. In this way, providers would be “blind” to a particular patient’s means to pay, but could still set a price for their services that they know they would get paid (i.e., representing and translating their prices, which they are otherwise free to set at any level they wish, into a national average day’s wages figure); this would also enable the provider to operate their medical practices and prepare their operating budgets for new equipment, etc. — because they know they would get paid a definite amount for each service performed.
This “Means-Based Health Care Currency System” would also have the advantage of making the transaction instantly. As soon as the patient had the service, using their Means-Based Health Care Currency card (similar to a Health Savings Account Card), the amount of the service (as a function of day’s wages) would be withdrawn from the patients individual account, and the provider, in turn, would be paid immediately a correspoding amoung based on the same “day’s wages” — not of the particular patient, but of the national average day’s wages.
To incentivize consumers to participate in such a plan, their could be a high percent of pre-tax dollars that one could place in their Means-Based Health Care Currency savings account. Thus, because the savings in such accounts would accrue tax-free, even wealthier patients would choose to participate. Moreover, all patients, regardless of income, would be incentivized to find the best value and quality and safety in the market -knowing they keep the savings they derived from good value choices. Equity, value-sensitivity, and means-blinding are all needed for sustainable health care reform

I have a PDF and diagram that explains this procedure in more detail. Feel free to contact me if you would like more information.

walker.randall@mayo.edu.
Randall Walker, MD
Consultant in Infectious Diseases
Mayo Clinic
Rochester, MN

]]> By: Launching the Mayo Clinic Health Policy Blog « Social Media University, Global (SMUG) http://healthpolicyblog.mayoclinic.org/2008/03/02/mayo-clinic-convenes-health-policy-reform-discussions/#comment-8 Launching the Mayo Clinic Health Policy Blog « Social Media University, Global (SMUG) Thu, 06 Mar 2008 07:52:03 +0000 http://healthpolicyblog.mayoclinic.org/?p=7#comment-8 [...] Now we’re starting our first major blogging initiative, as part of our Mayo Clinic National Symposium on Health Care Reform, which will be held next week in Leesburg, Va. You can read about it here. [...] [...] Now we’re starting our first major blogging initiative, as part of our Mayo Clinic National Symposium on Health Care Reform, which will be held next week in Leesburg, Va. You can read about it here. [...]

]]> By: Jim Guest’s Recommended Readings « Health Policy Symposium Blog http://healthpolicyblog.mayoclinic.org/2008/03/02/mayo-clinic-convenes-health-policy-reform-discussions/#comment-7 Jim Guest’s Recommended Readings « Health Policy Symposium Blog Thu, 06 Mar 2008 03:29:51 +0000 http://healthpolicyblog.mayoclinic.org/?p=7#comment-7 [...] Health Policy Symposium Blog Skip to content About « Mayo Clinic Convenes Health Policy Reform Discussions [...] [...] Health Policy Symposium Blog Skip to content About « Mayo Clinic Convenes Health Policy Reform Discussions [...]

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