Seven years ago, when writing my book on American health care, I met Dr. Jack Mahoney, then with Pitney Bowes. Dr. Mahoney had had a colorful career, including stints in the White House (as the physician personally assigned to President Ford) and then in the corporate world.
On a cool November morning, shortly after President Bush won reelection, I spoke to him about his efforts to tame his company’s health expenses. Dr. Mahoney, then the Pitney Bowes’ corporate medical director, oversaw a small army of employees tasked with pouring over the data generated by the 46,000 American employees and their families.
Dr. Mahoney had a frustrating job. In the mid-2000s, health costs rose at double or even triple general inflation.
The soft-spoken physician explained that his team had found several reasons for the rise. He had a long list, with many things that were unsurprising: Americans and their doctors like diagnostic tests; an aging population requires more care; Americans smoke too much, eat too much, and drink too much.
What made the conversation intriguing, though, was that he was dealing with real-life problems. This wasn’t a discussion confined to the think tank conference world, filled with opinion and ideology. Rather, Dr. Mahoney was looking at real data. And, in doing so, he and his team found some curiosities. Hospital costs would soar in a state like California year to year, not because employees ended up at, say, the LA County Hospital with more frequency than in the past, but as the result of aggressive hospital mergers, which gave hospitals greater negotiating power.
While Pitney Bowes’ employees were all across America, many were in large centers. And in cities like Los Angeles and New York, ER visits were frequent and expensive.
From a distance, this may suggest a raft of accidents. The problem, though, wasn’t mail room mishaps or the like, but rather the challenges of accessing primary care in those big urban centers.
In New York, he noted, family doctors offices often close at 5 P.M. Families find themselves in other settings for their primary care – like ERs.
“It’s one-stop shopping,” he told me. His argument was obvious: families can get all the tests and consultations needed in one visit when they go to an ER – and not take time off work. Sure they may pay more of a co-pay, but they save in wages and convenience.
Of course, not everyone saw it that way. For Dr. Mahoney, the ER was the expensive choice: costing the company roughly $700 for the ER, as opposed to a more modest $75 for the GP.
So goes Pitney Bowes, so goes New York. In a 2006 study of New York ER visits, researchers found 40% of visits could have been dealt with in a primary care setting.
Pitney Bowes has attempted to address the issue by offering their own primary care, through a network of office-based health clinics. But company employees are stretched across the country, often working in the offices of other companies. In other words, Dr. Mahoney could identify the problem but couldn’t really offer up a solution.
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American health care is wonderfully large and complicated – indeed, the health economy of the United States is larger than China’s entire economy. And as we look to solutions for one set of problems, it’s easy to neglect another area.
Last week, I was reminded of Dr. Mahoney’s comments. My friend and colleague Paul Howard of the Manhattan Institute wrote a report considering primary care in New York City, in the light of health-care reform efforts.
Howard considers a delicate question: what to do about primary care?
For the right – eager to see a market-alternative to Obamacare – more primary care options could mark the beginnings of a more functional market for health services. For the left – hopeful that last March’s East Room signing ceremony will result in full implementation of Obamacare – expanding primary care is key to providing care to millions of newly insured Americans.
Yet, despite the common interest in primary care reform, little work has been generated from think tanks or academics in the last couple of years, as experts have turned their attention to the increasingly bitter debate over Obamacare.
Howard isn’t exactly a fan of the President’s efforts, but recognizes that the number of insured Americans is likely to rise in the coming years. He also sees a potential Massachusetts’ problem, where a big health-care reform effort resulted in a big glut of insured people unable to find primary care.
As Howard notes:
In July 2010, Massachusetts released data showing that use of emergency rooms in the state increased by nearly 10 percent from 2004 to 2008, disappointing hopes that broader insurance coverage would reduce it. The same report noted that “expanded coverage may have contributed to the rise in emergency-room visits, as newly insured residents entered the health-care system and could not find a primary-care doctor or get a last-minute appointment with their physician.”
What then is to be done with the potential of 32 million Americans joining the ranks of the insured?
Howard sees part of the solution to be found in Wal-Mart – or rather, the retail clinics that are often found in Wal-Mart, Walgreens, and other stores across the country. Retail clinics, typically staffed by nurse practitioners, offer a variety of services at low costs.
Need a flu shot? The solution can be found off aisle 12.
Retail clinics aren’t the solution to all of our primary care needs, but they could be part of the solution. Howard notes study after study suggesting high satisfaction rates from patients, good adherence to clinical guidelines (frankly besting family docs in the treatment of sore throats), and overall cost effectiveness.
So, a quick review: a win-win for consumers and the system. But retail clinics aren’t much found in big cities like New York, and Howard tries to explain why.
The problem? Howard finds a raft of regulations stand in the way of these clinics. He focuses on New York City, of course, but the problem is all too familiar to people in other large cities.
Take Certification of Need (CON). In order to offer the good people of Soho, a low-cost option for, say, their flu shot needs, clinic owners need to get city approval, showing that the clinic is “needed.” (Imagine if we held Chinese restaurants or convenience stores to that standard.)
CON regulations date back to the 1970s, when health planners worried about a medical arms race and hoped to temper health inflation. Today, these rules still exist often championed by vested interests. (A few years ago, I was nominally involved in the Crist administration’s attempts to overhaul Florida’s CON law. The administration’s chief opponent? The hospital lobby.)
Howard concludes his insightful study by offering some practical suggestions for increasing the number of New York retail clinics – good advice for policy-makers that will benefit New Yorkers and today’s Dr. Mahoneys.
But Howard’s work also speaks to the incredible challenges that reform efforts will face in the coming years. Republicans and Democrats need to take note. Yes, there are problems with access, cost, and uneven quality. But American health care also suffers from decades of hyper-regulation, making even modest changes difficult. And while it’s wonderful that the left champions Obamacare and the right favors empowered health savings accounts, the example of retail clinics in New York City speaks to limitations of both approaches until this hyper-regulatory environment is addressed.