Community For Better Health Care

Vol VII, No 7, July 15, 2008


In This Issue:

1.                  Featured Article: The Innovator's Prescription to Transform Health Care

2.                  In the News:  Environmentalist Predictions

3.                  International Medicine: Wishful thinking about Canada's current health care system

4.                  Medicare: Dead Doctors Get Paid Well by Medicare

5.                  Medical Gluttony: The Hazards of Practice

6.                  Medical Myths: Organized Medicine Supports Doctors

7.                  Overheard in the Medical Staff Lounge: Peer Review: Doctors policing their competition

8.                  Voices of Medicine: What's Really Killing Medicine

9.                  The Physician Patient Bookshelf: A Call to Action by Hank McKinnell, WHCC

10.              Hippocrates & His Kin: Doctors are laying off their staff.

11.              Related Organizations: Restoring Accountability in HealthCare, Government and Society

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The Annual World Health Care Congress, co-sponsored by The Wall Street Journal, is the most prestigious meeting of chief and senior executives from all sectors of health care. Renowned authorities and practitioners assemble to present recent results and to develop innovative strategies that foster the creation of a cost-effective and accountable U.S. health-care system. The extraordinary conference agenda includes compelling keynote panel discussions, authoritative industry speakers, international best practices, and recently released case-study data. The 3rd annual conference was held April 17-19, 2006, in Washington, D.C. One of the regular attendees told me that the first Congress was approximately 90 percent pro-government medicine. The third year it was 50 percent, indicating open forums such as these are critically important. The 4th Annual World Health Congress was held April 22-24, 2007 in Washington, D.C. That year many of the world leaders in healthcare concluded that top down reforming of health care, whether by government or insurance carrier, is not and will not work. We have to get the physicians out of the trenches because reform will require physician involvement. The 5th Annual World Health Care Congress was held April 21-23, 2008 in Washington, D.C. Physicians were present on almost all the platforms and panels. This year, it was the industry leaders that gave the most innovated mechanisms to bring health care spending under control. The solution to our health care problems is emerging at this ambitious congress. Plan to participate: The 6th Annual World Health Care Congress will be held April 14-16, 2009 in Washington, D.C. The World Health Care Congress - Asia was held in Singapore on May 21-23, 2008. The 5th Annual World Health Care Congress – Europe 2009 will meet in Brussels, May 23-15, 2009. For more information, visit The future is occurring NOW. Today, we give you our second report. 

We bring you probably the most significant presentation of the Congress by Prof Clayton Christensen of Harvard. We also bring you a review of A Call to Action by Hank McKinnell, Chairman & CEO of Pfizer.

To reread our initial report, please go to the archives at and click on the June 10, 2008 Newsletter.

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1.      Featured Article: The Innovator's Prescription to Transform Health Care

The Innovator's Prescription: How Disruptive Innovation Can Transform Health Care

By Clayton Christensen, Harvard Business School, April 2008

Disruptive Technologies: A driver of leadership failure and the source of new growth opportunities. Disruptive technologies always start at the bottom. Their struggle is to sustain that innovation and keeping pace with technological progress and improved performance that customers can utilize or absorb. Entrants nearly always win. Meanwhile, incumbents who are able to sustain innovation and keep pace with technological progress, also nearly always win. The trajectory of technological progress, nearly always outstrips the ability of customers to utilize that progress. 

In medicine, the x-ray was disrupted by the CT scan, which in turn was disrupted by the MRI, and now the MRI has been disrupted by the PET scan.

The microprocessor was disruptive of the large IBM mainframes. IBM, however, has been able to sustain innovation at this time.

Toyota, coming in at the bottom of the market, disrupted General Motors and Ford. This creates conflict within those companies. Toyota started with the very basic Corolla, and then gradually moved upward to the Camry, Avalon, and then Lexis.

Meanwhile, General Motors and Ford were already there. It's so easy to continue upwards in that trajectory, but so difficult to move downward. They already had the high-end customers for which the ordinary automobile would never satisfy. However, in their conflict, GM & Ford aimed downward, made smaller and cheaper cars and lost their quality as Toyota continued their upward trajectory in quality, performance, value and price. It made no sense to go down, when they had the option of going upwards and competing with Mercedes and the world's best.

The same disruption is happening from the department stores to Wal-Mart to Internet marketing; from IBM, to Microsoft, to Linux; from AT & T, to Cingular, to Skype.

Disruption in production moving from Japan, to Korea and Taiwan, to China and India; The Sony DiskMan being replace by the Apple iPod; and now Cell Phones.

Disruption in business has been the key to progress.

There are three enablers of disruption: Technological; Business Model; Commercial system

Disruption is facilitated when historically valuable (and expensive) expertise becomes commoditized. Then when disrupted, experimentation and problem solving occurs. Then patter recognition occurs.

Molecular diagnostics and imaging technologies are important technological enablers for disruptive business models in health care. The body has a limited number of symptoms. There are not enough symptoms to go around for each disease to have its unique one. Symptoms are not specific to each disease. Then patterns begin to emerge.

Intuitive Medicine is the standard approach of treatment. Intuitively, physicians have learned that one therapy in hypertension may not work in another patient with hypertension.  In Diabetes, there is elevation of blood sugar. There are about 20 causes of such elevation or hyperglycemia. Empirical medicine is the process of determining which of the causes are present in a particular patient. The Precision Medicine is targeting that particular etiology or cause to make an accurate diagnosis and a more specific treatment program.

What is a business model, and how is it built?

The following basics on which to build are interdependent.

THE VALUE PROPOSITION: A product that helps customers do more effectively, conveniently & affordably a job they've been trying to do

PROFIT FORMULA: Assets & fixed cost structure, and the margins & velocity required to cover them.

PROCESSES: Ways of working together to address recurrent tasks in a consistent way: training, development, manufacturing, budgeting, planning, etc.

RESOURCES: People, technology, products, facilities, equipment, brands, and cash that are required to deliver this value proposition to the targeted customers.

We always revert to a fee for service. Everything is unique. There is no alternative.

There are three types of business models.

SOLUTION SHOPS, examples are as follows:

                        •Consulting firms

                        •High-end law firms

                        •R&D organizations

                        •Diagnostic activities of hospitals

VALUE CHAINS, examples are as follows:


•Food services


•Medical procedures

FACILITATED USER NETWORKS, examples are as follows:




•D-Life (for diabetes patients & families)

Business model disruption in health care

Today's hospital and specialists physician practices are agglomerations of Solutions Shops, Value Chains, and a few are Facilitated User Network Activities.

Hospitals become focused solution shops, practicing intuitive medicine;

Focused value chain hospitals provide procedures after definitive diagnosis;

Facilitated networks take dominant role in the care of many chronic diseases.

Disruptive innovation in the hospital business model

"General hospitals" and "Focused value chain hospitals are both driven by profit."

The Value Proposition of a General Hospital: Don't know what's wrong? We can address any problem you bring.

The Value Proposition of a Focused Value Chain Hospital: When you know what you need, we provide it efficiently, effectively.

Disruptive business model innovation in physicians' practices

The "physician's office" and the "three minute clinic" are both driven by profit.

The Value Proposition of a "physician's office" is: "The solution to any problem begins here."

The Value Proposition to a "Three minute clinic" is "Fast, convenient resolution of rules-based acute disorders."

Integration will be crucial


Rational, accurate pricing

Licensing restrictions

Behavioral incentives

Personal electronic medical records

The above five are all interrelated. One cannot discuss reimbursement without rational pricing. One cannot have rational pricing without understanding licensing restrictions, incentives or EMR. Hence, all five must move together.

Disruptions are rarely "hot-swapped" into the old commercial system. An entirely new commercial system typically emerges to replace the old one.

Everyone in the health care has a different perspective.  There was an extensive discussion of the patients, providers, employers, insurers, and the politician's perspective. The politician's perspective was the easiest to keep accurate:

Help me stay in office while I balance the budget

Make health care affordable and conveniently accessible

The predictive power of theory improves markedly when careful researchers move beyond statements of correlation to statements of causality.

The reactors were Delos (Toby) Cosgrove, MD, CEO and President, Cleveland Clinic Foundation who pointed out the disruptive technologies in coronary disease as technology allowed more accurate diagnosis and therefore, treatment including managing arrhythmias via the internet; Grant Harrison, VP, Integrated Consumer Experience, Humana, Inc, and Lee Shapiro, President, Allscripts, who spoke about the Electronic Medical Records.

Clayton Christensen, co-founder of Innosight, is also the Robert and Jane Cizik Professor of Business Administration at Harvard Business School, where he teaches Technology & Operations Management and General Management. His research and teaching interests center on the management of technological innovation, developing organizational capabilities, and finding new markets for new technologies.

You can read more about Clayton Christensen at

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2.      In the News: Environmentalist Predictions

A minority view: Environmentalists' wild predictions by Walter E. Williams

Now that another Earth Day has come and gone, let's look at some environmentalists' predictions that they might prefer we forget.

At the first Earth Day celebration in 1969, environmentalist Nigel Calder warned, "The threat of a new ice age must now stand alongside nuclear war as a likely source of wholesale death and misery for mankind." C.C. Wallen of the World Meteorological Organization said, "The cooling since 1940 has been large enough and consistent enough that it will not soon be reversed."

And in 1968, Professor Paul Ehrlich, former Vice President Al Gore's hero and mentor, predicted that there would be a major food shortage in the United States and that "in the 1970s … hundreds of millions of people are going to starve to death." Ehrlich forecasted that 65 million Americans would die of starvation between 1980 and 1989, and that the US population would have declined to 22.6 million by 1999. Ehrlich's predictions about England were even gloomier: "If I were a gambler, I would take even money that England will not exist in the year 2000."

In 1972, a report was written for the Club of Rome, warning that the world would run out of gold by 1981, mercury and silver by 1985, tin by 1987, and petroleum, copper, lead, and natural gas by 1992. Gordon Taylor, in his 1970 book, The Doomsday Book, wrote that Americans were using 50% of the world's resources and that "by 2000 they [Americans] will, if permitted, be using all of them." In 1975, the Environmental Fund took out full-page ads warning, "The world as we know it will likely be ruined by the year 2000."

Further, in 1970, Harvard University biologist George Wald warned, "civilization will end within 15 or 30 years unless immediate action is taken against problems facing mankind." That was the same year that Senator Gaylord Nelson warned, in Look Magazine, that by 1995 "somewhere between 75 and 85 percent of all the species of living animals will be extinct."

Latter-day doomsayers are not the only environmentalists who have been wrong. Doomsayers have always been wrong. In 1885, the US Geological Survey announced that there was "little or no chance" of oil being discovered in California, and a few years later they said the same about Kansas and Texas.  In 1939, the US Department of the Interior said American oil supplies would last only another 13 years. In 1949, the Secretary of the Interior said the end of US oil supplies was in sight. Having learned nothing from its earlier erroneous claims, in 1974, the US Geological Survey advised us that the United States had only a 10-year supply of natural gas. The fact of the matter, according to the American Gas Association, is that there is a 1,000 to 2,500-year supply.

Here are my questions: In 1970, when environmentalists predicted man-made global cooling and a coming ice age, and warned us that millions of Americans would starve to death, what kind of government policy should the United States have undertaken to prevent such a calamity? When Ehrlich predicted that England would not exist in the year 2000, what steps should the British Parliament have taken in 1970 to prevent such a dire outcome?

In 1939, when the US Department of the Interior warned that Americans only had oil supplies for another 13 years, what actions should President Roosevelt have taken? Finally, what makes us think that environmental alarmism is any more correct today, now that environmentalists have switched their tune to man-made global warming?

Here are a few facts: . . . To read the rest of this report, go to

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3.      International Medicine: Wishful thinking about Canada's current health care system

Wishful thinking to believe Canada's current health care system is financially sustainable

TORONTO, ON-The current rate of government spending on health care is not sustainable, despite the wishful thinking expressed in articles published in a recent edition of the Canadian Medical Association Journal, says Brett Skinner, Director of Health, Pharmaceutical and Insurance Policy Research for independent research organization The Fraser Institute.

In his latest paper, Misinformation and Wishful Thinking about Medicare's Sustainability, Skinner refutes arguments put forth by Irfan Dhalla and François Béland in the July 2007 edition of the CMAJ suggesting there is no reason to worry about the annual rate of growth in government spending on health care.

"The articles contained methodological and conceptual errors that resulted in misleading conclusions," said Skinner, who has published several peer-reviewed studies examining the sustainability of Canada's health care system.

Skinner points out that the Dhalla and Béland articles only looked at health expenditure trends during the 1990's -- a time dominated by unpopular government restrictions on health spending and rationing of access to health care resources.

"But the slowdown in spending growth was only temporary because restricting access to necessary medical care is not a sustainable way to control health costs," he said.

"Since 1997 public health spending has continued to increase, growing much faster than our ability to pay for it through the public system alone."

Skinner points out that one of the articles also excluded spending on drugs and other out-patient services funded through various provincial health programs, a logic that implies public money spent on doctors should be counted, but not the public money spent on the treatments they prescribe.

Skinner argues that the most accurate way to measure sustainability of health care spending is to look at the ratio of public health spending to government revenue, which measures the ability of government to pay from current revenues.

This metric directly satisfies the definition of long-run sustainability and immediately exposes any attempt to use deficits to finance public health spending. The ratio of public health spending to revenue also makes the tax implications clear.

For example, if public health spending is to be kept at a stable percentage of revenue, then revenue must grow at least as fast as public health spending. If the required growth rate for revenue is higher than can be generated by GDP growth alone, it is clear that, if governments insist on clinging stubbornly to the existing system of financing health care, tax rates must rise or new taxes must be introduced. . .

Skinner finds that researchers who deny that the growth of government spending on health care observed in Canada is unsustainable base their analyses on four unrealistic assumptions:

·        That the scope of coverage for and access to medically necessary care can be reduced indefinitely;

·        That tax rates can increase indefinitely to fund health spending growth;

·        That the proportional growth of spending on health care can indefinitely squeeze out spending on other things; and

·        That any of the above can happen without negative medical, economic or political consequences.

"Past research has clearly demonstrated that each of these assumptions are not realistic and Canadians should not be lulled into a false sense of security by such wishful thinking," Skinner said.

"Whether you look at health care spending trends over the past five years or over the past 31 years, the conclusion is the same – our current public health care system is not financially sustainable."

Read the entire report at

 Canadian Medicare does not give timely access to healthcare, it only gives access to a waiting list.

--Canadian Supreme Court Decision 2005 SCC 35, [2005] 1 S.C.R. 791

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4.      Medicare: Dead Doctors Get Paid Well by Medicare

Report Links Dead Doctors to Payments by Medicare By ROBERT PEAR, NYT, July 9, 2008

WASHINGTON - Congressional investigators said Tuesday that Medicare had paid tens of millions of dollars to suppliers improperly using identification numbers of doctors who died years ago.

The government has no reliable way to spot claims linked to dead doctors, many of whom are still listed as active Medicare providers though they died 10 or 15 years ago, the Senate Permanent Subcommittee on Investigations said.

Medicare covers wheelchairs, walkers, home oxygen equipment and many other types of medical equipment. When suppliers file claims for equipment provided to a Medicare beneficiary, they normally must list an identification number for the doctor who prescribed or ordered it.

"From 2000 to 2007, Medicare paid 478,500 claims containing identification numbers that were assigned to deceased physicians," the subcommittee said in a new report. "The total amount paid for these claims is estimated to be between $60 million and $92 million. These claims contained identification numbers for an estimated 16,548 to 18,240 deceased physicians."

In 16 percent of these cases, the report said, suppliers used identification numbers of doctors who had been dead for more than 10 years. In one case, Medicare paid more than 2,000 claims totaling $479,000 for services provided from 2002 to 2007, even though the doctor had died in 1999.

Another doctor died in 2001, but his identification number was used in more than 3,800 claims from 2002 to 2007, with payments totaling more than $354,000.

"Scam artists have treated Medicare like an automated teller machine, drawing money out of the government's account with little fear of getting caught," said Senator Norm Coleman of Minnesota, the senior Republican on the subcommittee. "When Medicare is paying claims and the doctor has been dead for 10 or 15 years, you know there is a serious problem."

The subcommittee, headed by Senator Carl Levin, Democrat of Michigan, plans to hold a hearing on the issue on Wednesday.

Herb B. Kuhn, deputy administrator of the Centers for Medicare and Medicaid Services, said he shared the concern that "Medicare is continuing to pay claims to providers who are using invalid or inactive physician numbers.". . .

Mr. Levin said Medicare and its contractors shared responsibility for "this taxpayer rip-off."

About 2,500 doctors who died before 2003 "still had active identification numbers" in May of this year, Mr. Levin said.

 Government is not the solution to our problems, government is the problem.

- Ronald Reagan

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5.      Medical Gluttony: Cyber Medicine without Cyber Space; The Hazards of Practice

A patient from the foothills who drives an hour to our office states that when he doesn't show up for appointments, I should just pretend he's sitting in the patient chair, go through the motions, write up a visit and send in the usual charges.

I immediately told him this was not only dishonest, but highly unethical and violated the Medical Practice Act.

He said that he understood that. But that was no reason not to proceed. He further stated that it was a win-win situation. He would save a tank full of gas and I would preserve income from him.

He thought this was funny until I warned him that I normally don't care for people who suggest criminal behavior that jeopardizes my licensure.

He laughed half-heartedly saying it was really a joke. He really got worried that he might have to find another lung doctor. He apologized profusely, held out his hand to make sure I forgave him.

This reminded me of another patient who tried to be helpful. He thought he was making a helpful suggestion about how I could double my income. He said I was too thorough and should spread out my consultation. He suggested doing the pulmonary function on one visit, the chest x-ray on another visit, return again for the electrocardiogram and a final visit after the lab testing. I thanked him for his concern but told him I didn't know of any patients that would allow themselves to be so greatly inconvenienced.

A kindly old family doctor saw an officer as a patient. He thought he was examining a deputy sheriff and when he was leaving, the patient asked him to authorize a cane for his mother who would be coming in the next week. The doctor had been doing kindly things for his patients and their families for forty years as an old country doc. Not being aware of the details of the Medical Practice Act, he signed the script and handed it back to his new patient with a smile. "Glad to oblige," he said. "I'll be looking forward to seeing your mother next week." The officer stated that there would be no mother, and that the doctor had prescribed without examining the patient in violation of the Medical Practice Act and, therefore, arrested him. After handcuffing him, he led him through the waiting room where his patients were aghast. His staff tried to explain as they cancelled the appointments. This kindly doctor did some jail time and never practiced again. His quarter million dollar investment in his education just depreciated 100 percent to zero. What a waste of a valuable professional education.

This family doctor probably did more good for humanity than a dozen officer stoolies.

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6.      Medical Myths: Organized Medicine Supports Doctors

Organized Medicine's Unhealthy Focus on "Medical Loss Ratio" By John R. Graham, Pacific Research Institute

Why Does the California Medical Association Want Accountants to Run Health Care?

The California Medical Association has released its annual ranking of the state's health plans.  No, the ranking does not measure health plans by the degree to which their reimbursement policies hew to medically recognized standards of care, which I believe most laymen would consider a public service.

Instead, they've measured health plans by the medical loss ratio (MLR): the percentage of premium dollars spent on medical care, as opposed to administrative costs. Currently, this is an accounting measure that California health plans report to the state, but which has no regulatory implications. The CMA supports a bill, SB-1440, that would mandate an MLR of at least 85 percent.

While this sounds patient-friendly, it is not. I addressed the fallacy of regulating the MLR in my January paper on the California Health Care Deforminator, ABX1 1, the Schwarzenegger-Nuñez bill that also included an 85% MLR.

Put simply, the MLR is an accounting measure, not a measure of quality or efficiency. For some plans, the MLR is quite impossible to interpret, especially those that serve government programs. For example, Molina Healthcare of California is a Medicaid managed-care plan that reported an MLR of 167.26 for 2006. Obviously, there is no real way for a health plan to spend two-thirds more on medical costs than it earns!

According to Professor James C. Robinson of the University of California, Berkeley, "the Medical Loss Ratio is an accounting monstrosity that enthralls the unsophisticated observer and distorts the health policy discourse." There are a number of reasons for this "monstrosity," according to Professor Robinson. Many health insurers compete in markets across the country, allocating overheads across state lines, which makes accounting conventions even more arbitrary.

Narrow networks obviously have fewer administrative costs than broader networks, but patients appear to value broader networks nevertheless. Also, integrated managed-care organizations, such as Kaiser Permanente, can have much higher MLRs because they move administrative costs to the provider side of their organizations. PPOs have higher administrative costs because they cannot do this.

Regulating the MLR is also deadly for consumer-directed plans, which are becoming increasingly popular. Let's assume a scenario where a consumer-directed health policy incurs exactly the same costs as a traditional policy. (In fact, this is unlikely, because total costs of consumer-directed plans are significantly lower than for traditional ones, as patients have better incentives to control costs.) The traditional policy costs $4,000 and spends $3,400 on patient care, for an MLR of 85.00. With the consumer-directed policy, the patient controls $800 more of the medical spending than with the traditional policy (through a higher deductible), and his premium goes down by $800. In this case the MLR goes down to 81.25 ($2,600/$3,200). There is no real difference, but the accounting looks worse.

The CMA's report also rails against the "profits" of the for-profit health plans, blaming high MLRs on capitalism. (To drive the point home, the report gratuitously announces the total remuneration of senior executives at health plans that are listed on the stock market. I wonder when the CMA will publish remunerations of the highest paid doctors in the state?)

But of the three health plans with the "worst" MLRs, which the CMA chose to single out in its press release, one is a not-for-profit. Of the two plans that it singled out for the "best" MLRs, one is for-profit. There is no consistent relationship between a health plan's taxable status and its MLR.

Somehow, the CMA believes that if the law compelled all health plans to magically adhere to an 85% MLR, that money would go to patient care.  But it would not: capital would flee the state, fewer medical procedures would get done, and more Californians would become dependent on the state for health care. . . .

Organized medicine must focus on restoring physicans' right to practice medicine - not imposing a government accountant's right to practice it for them.

It's time that physicians have an organization that supports the doctor-patient relationship.

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7.      Overheard in the Medical Staff Lounge: Peer Review: Doctors policing their competition

Dr. Dave: I received a letter from the medical staff office that I had a patient in the hospital with a BP of 160/90 and I wasn't very aggressive in reducing it to the 120/70 range.

Dr. Patricia: Isn't that the goal on reducing BP?

Dr. Rosen: I go to the Medical Grand Rounds at UC Davis and the visiting professor stated that 160/90 should be considered the normal for people in their eighth decade of life.

Dr. Dave: Well my patient was 80 or approaching the ninth decade of life.

Dr. Patricia: I go to our hospital noon conferences and I've never heard of a normal being that high.

Dr. Dave: I think that points out the hazard of doctors who are in competition with each other reviewing each other's charts in Peer Review. The doctor being reviewed can be made to look bad when in fact, s/he may know more than the doctor reviewing the chart.

Dr. Milton: It wouldn't be so bad if these were open discussions. But Peer Review is a closed confidential system designed to eliminate bad doctors.

Dr. Dave: Precisely. It is being utilized as a system to eliminate those who are perceived as bad doctors when instead the reviewing doctor may be the one most out of date.

Dr. Rosen: Of interest to me at the Medical Grand Rounds was a question the visiting professor asked. "Do you want my professional opinion or do you want the evidenced-based opinion?"

Dr. Dave: That was an interesting response. I can't wait.

Dr. Rosen: The doctor in the audience replied, "Give us both."

Dr. Milton: This is an unbelievable response from a professor.

Dr. Rosen: The visiting professor gave the evidence-based opinion quoting all the conflicting references and said the information for the best evidenced-based answer was not well defined. He then gave his own clinical opinion, which I'm sure the evidence will eventually uphold.

Dr. Dave: This just shows that the cut and dried measurements of a doctor's competence leaves a whole lot to be desired.

Dr. Milton: Looks to me like this is a hazardous road for doctors to allow. What can we do?

Dr. Sam: I think we need to email these types of problems to the entire medical staff individually and throw the medicine committee out.

Dr. Rosen: Easier said than done.

Dr. Sam: If we all just respond to the last newsletter we got from the department, and answer it so all those 400 email addresses are still in there, and change the body to what we just talked about, then we all can inform the entire medical staff of the problem.

Dr. Milton: Don't you think herding doctors into a unified response is like trying to herd a flock of chickens?

Dr. Sam: But the chickens will do enough pecking and cackling. I think the attention may make the powers that be rather uncomfortable.

Dr. Rosen: But the culprits will tolerate almost any pain to protect their hospital-based income and drive the competition into the National Data Bank.

Dr. Sam: And the NDB is the permanent tomb for doctors. Once there, they're dead. Never to compete again.

Dr. Milton: And their families have to apply for welfare.

Dr. Rosen: Who would have thought while in medical school that doctors would ever be bottom dwellers?

Dr. Sam: Well, I've thoroughly discouraged my kids from ever going into medicine. That's like sending sheep to the slaughter.

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8.      Voices of Medicine: A Review of Local and Regional Medical Journals

SONOMA MEDICINE, the Magazine of the Sonoma County Medical Association, Spring 2008

FEATURE ARTICLE - What's Really Killing Medicine By Brien Seeley, MD

Wanna fix health care in the United States? Then fix the ridiculous way the system pays physicians and other providers. Having recently been forced to learn medical billing, I can attest that the current system:

The system continues to drive many of Sonoma County's private practitioners to outright quit or seek refuge in salaried positions with large foundations or HMOs. Meanwhile, physicians still in private practice are struggling just to manage the accounts-receivable quagmire.

In 2003, a New England Journal of Medicine article estimated that administration accounted for about 31% of all health care costs in the United States.[1] I would wager that figure substantially underestimates the true waste. Nonproductive administrative costs are soaring because insurers are allowed to systematically delay, deny, obfuscate and diminish payment for services performed. Their powerful lobby and the politicians who feed from it perpetuate this absurd system by claiming that reform would destroy private practice and bring on socialized medicine, with its long waits for services, lack of choice of physician, poorly trained providers, and other nightmares. Guess what? Those scares are already here because of the payment system we have now.

In the current system, after a patient visits a private-practice physician, insurers usually send the patient an Explanation of Benefits (EOB) showing a sizable-looking bill for the physician's services. Truth be known, the bill often gets so whittled down that the physician ultimately takes home a small fraction of the amount shown.

After the EOB is issued (typically 18 days or more), the physician can seek payment for the remainder of the fees denied by the EOB. While Medicare electronically forwards a claim on behalf of the physician for the remaining amount due to the appropriate secondary insurance company (e.g. Blue Cross), there is no guarantee that such will be paid. Nor is it likely to be paid before a legally sanctioned 45-day delay. What's more, some secondary insurers make it their business to hide from Medicare's electronic bill forwarding.

Only if the physician's biller assiduously follows up each EOB with another time-consuming cycle of billing, stamping, mailing and then waiting 45 days will secondary insurers be confronted with the obligation to pay their share. After 45 days or more, when the secondary insurer has presumably paid, the physician is finally allowed to bill the patient for the patient's responsibility.

Some patients pay their bill within two weeks, but many have to be contacted repeatedly by the physician's biller, with lengthy phone time explaining the tortuous billing process to convince elderly, deaf or confused patients that they do indeed owe the physician the remaining charges. That same biller must also navigate the onerous voice-mail trees of dozens of different insurers as a large part of each day's work, all while getting paid $20 to $30 an hour by the physician.

This wicked diffusion of responsibility by payors divides the proper amount due to the physician into essentially the low-hanging and the hard-to-reach fruit. Many offices, realizing that each mailed billing statement effectively costs them $10, simply choose not to play "fetch" and therefore do not attempt to collect the "dregs" of $15 or less. Those dregs then become a huge unaccounted shortfall for physicians - a hidden subsidy that is conveniently not talked about by insurers and to which patients are oblivious.

Insurers and politicians have long perpetuated the idea that patients should not have to pay at the time of their visit. Thus the familiar "When you're sick, the last thing you want is to worry about paying right then," or "Don't worry, the physician's office can easily wait to receive payment." . . . 

Physicians, perhaps the most educated of professions, are being grossly devalued by the present system. Today, many full-time private-practice physicians earn less than RNs, and some earn less than rookie police officers. If we fixed our ridiculous payment system, patients would have more options, health care would cost less and physicians would be better paid. Such a fix could stem the collapse of private practice and its valuable legacy of personalized care.

To read the rest of this article, go to

Dr. Seeley, a Santa Rosa ophthalmologist, serves on the SCMA Editorial Board.

To read more VOM, please go to

To read HMC, please go to

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9.      Book Review: A Call to Action by McKinnell, speaker, 4th Annual World Health Care Congress

A CALL TO ACTION - Taking Back Healthcare for Future Generations, by Hank McKinnell, McGraw-Hill, New York, Chicago, San Francisco © 2005, ISBN: 0-07-144808-X, 218 pp, $27.95.

Hank McKinnel, Chairman & CEO, Pfizer, opens the preface with the question, "Is our healthcare system really in crisis?" He finds the question difficulty to answer because it makes a presumption he doesn't accept. The phrase with which he has trouble is "healthcare system." He agrees there's a crisis, but it isn't in "healthcare" - it's in "sick-care."

He quotes Mohandas Gandhi who had similar difficulty in 1932. He had led a campaign of non-violent disobedience to help colonial India win independence from Britain. After being named Time magazine's "Man of the Year," Gandhi visited London for the first time. The entire world was curious, the press swarmed wherever he went, when one reporter's hastily called-out question became a defining moment, both for him and for the nation, he was trying to set free.

"What do you think of Western civilization?" yelled the reporter.

"I think it would be a good idea," replied Gandhi.

That's what McKinnell thinks about our healthcare system: It would be a good idea.

He maintains we've never had a healthcare system in America. As far as he can tell, neither has any other nation. What we've had - and continue to have - is a system focused on sickness and its diagnosis, treatment and management. It's a system that is good at delivering procedures and interventions. It's also a system focused on containing costs, avoiding costs, and, failing all else, shifting costs to someone, anyone else. In fact, discussions about better health now take a back seat to arguments about costs. In the United States, a nation already spending nearly $2,000,000,000,000 a year on sick care, tens of millions of people do not have adequate access t the system. I other developed nations, rationing and price controls undermine the patient-physician relationship, degrade the quality of care, and add to the anxiety of individuals struggling with health issues. An aging population around the world clamors for relief from chronic diseases and the cumulative effects of heredity and lifestyle behaviors. Some of these we cannot as yet prevent. Others, such as smoking, we can.

Today, in healthcare, we have it entirely backwards. We're like a community that builds the best fire-fighting capability in the world but stops inspecting buildings or teaching kids abut fire prevention. Fighting fires is sometimes necessary, and we must be prepared to do that with the most modern technology available. But firefighters around the world will tell you that they'd rather prevent fires than fight them.

To put it simply, McKinnell feels that our fixation on the costs of healthcare - instead of the costs of disease - has been a catastrophe for both the health and wealth of nations. By defining the problem strictly as the cost of healthcare, we limit the palette of solutions to those old stand-bys - rationing and cost controls. What if we reframe the debate and consider healthcare not as a cost, but rather an investment at the very heart of a process focused on health? Then other solutions suddenly appear out of the fog.

That's why this book was titled A Call to Action. It represents McKinnell's conviction that the debate on the world's healthcare systems is on the wrong track. Unless we correct our course, we will not be able to make the same promises to our children and grandchildren that our parents and grandparents delivered to us: that you will receive from us a better world than we received from our forebears. He feels that the basic biomedical research conducted by his company is doing just that. But he's concerned that his and other research-based pharmaceutical companies might lose the capacity to advance the science that can change the lives of our children and grandchildren for the better, just as polio vaccines and cardiovascular medicines and other therapies changed out lives. . . To read the rest of the review, please go to

--Del Meyer, MD

To read more book reviews, go to

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10.  Hippocrates & His Kin: Doctors are laying off their staff.

The grape-vine in doctor's offices frequently are the pharmaceutical reps. One told us that many of the offices that she calls on have laid off nurses, medical assistants, receptionists and medical billers. Some are moving to smaller offices. This obviously does have a possible side effect of improved efficiency.

The economy has been very disruptive. But will doctors be able to improve their bottom line?

California's Governor, Arnold Schwarzenegger, who in the past has vetoed any increase in the minimum wage, is threatening to reduce state salaries to the minimum wage until the California Legislature comes up with a budget. The controller is threatening to stop him with a lawsuit.

You suppose that a government could be run with business accountability?

There is also a threat to lay off thousands of superfluous government part time, seasonal, and unnecessary workers that don't do any useful work. With the debates on talk radio, maybe the wrong people are being laid off. The prevailing opinion is that salaries of state legislators should go to zero until we have a state budget.  

That certainly would be very effective.

To read more HHK, go to

To read more HMC, go to

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11.  Organizations Restoring Accountability in HealthCare, Government and Society:


                      The National Center for Policy Analysis, John C Goodman, PhD, President, who along with Gerald L. Musgrave and Devon M. Herrick wrote Lives at Risk, issues a weekly Health Policy Digest, a health summary of the full NCPA daily report. You may log on at and register to receive one or more of these reports. This month, read about Five Family Friendly Policies.

                      Pacific Research Institute, ( Sally C Pipes, President and CEO, and John R Graham, Director of Health Care Studies, publish a monthly Health Policy Prescription newsletter, which is very timely to our current health care situation. You may signup to receive their newsletters via email by clicking on the email tab or directly access their health care blog. Be sure to read Michael Medved's Confronting and Understanding Media Bias.

                      The Mercatus Center at George Mason University ( is a strong advocate for accountability in government. Maurice McTigue, QSO, a Distinguished Visiting Scholar, a former member of Parliament and cabinet minister in New Zealand, is now director of the Mercatus Center's Government Accountability Project. Join the Mercatus Center for Excellence in Government. This month, read Universal Service Reform: Start With Accountability.

                      The National Association of Health Underwriters, The NAHU's Vision Statement: Every American will have access to private sector solutions for health, financial and retirement security and the services of insurance professionals. There are numerous important issues listed on the opening page. The HIU magazine, with Jim Hostetler as the executive editor, covers technology, legislation and product news - everything that affects how health insurance professionals do business. Be sure to review the current articles listed in their table of contents for each digital edition. To see my recent column, go to

                      The Galen Institute, Grace-Marie Turner President and Founder, has a weekly Health Policy Newsletter sent every Friday to which you may subscribe. A new study of purchasers of Health Savings Accounts shows that the new health care financing arrangements are appealing to those who previously were shut out of the insurance market, to families, to older Americans, and to workers of all income levels. This month, be sure to read why bashing the American health care system has become a cottage industry.

                      Greg Scandlen, an expert in Health Savings Accounts (HSAs) has embarked on a new mission: Consumers for Health Care Choices (CHCC). Scroll down to read the initial series of his newsletter, Consumers Power Reports. There are two levels of membership to receive this newsletter by email and other benefits. Be sure to read Prescription for change:  Employers, insurers, providers, and the government have all taken their turn at trying to fix American Health Care. Now it's the Consumers turn. This month, read Ralph Weber on HRAs.

                      The Heartland Institute,, publishes the Health Care News. Read the late Conrad F Meier on What is Free-Market Health Care?. You may sign up for their health care email newsletter.

                      The Foundation for Economic Education,, has been publishing The Freeman - Ideas On Liberty, Freedom's Magazine, for over 50 years, with Richard M Ebeling, PhD, President, and Sheldon Richman as editor. Having bound copies of this running treatise on free-market economics for over 40 years, I still take pleasure in the relevant articles by Leonard Read and others who have devoted their lives to the cause of liberty. I have a patient who has read this journal since it was a mimeographed newsletter fifty years ago. Why not peruse the NOTES FROM FEE.

                      The Council for Affordable Health Insurance,, founded by Greg Scandlen in 1991, where he served as CEO for five years, is an association of insurance companies, actuarial firms, legislative consultants, physicians and insurance agents. Their mission is to develop and promote free-market solutions to America's health-care challenges by enabling a robust and competitive health insurance market that will achieve and maintain access to affordable, high-quality health care for all Americans. "The belief that more medical care means better medical care is deeply entrenched . . . Our study suggests that perhaps a third of medical spending is now devoted to services that don't appear to improve health or the quality of care–and may even make things worse." This month, read America's Affordable Health Reform Plan.

                      The Independence Institute,, is a free-market think-tank in Golden, Colorado, that has a Health Care Policy Center, with Linda Gorman as Director. Be sure to sign up for the monthly Health Care Policy Center Newsletter. This month, be sure to read If Global Warming is the Problem then Technology Must be the Solution.

                      Martin Masse, Director of Publications at the Montreal Economic Institute, is the publisher of the webzine: Le Quebecois Libre. Please log on at to review his free-market based articles, some of which will allow you to brush up on your French. You may also register to receive copies of their webzine on a regular basis. This month, be sure to read: While climate change is "real" (a meaningless statement), global warming at the moment is not "real" because the planet isn't warming, hasn't for the past 10 years, and may not for another 10 years according to a study published in Nature in May.

                      The Fraser Institute, an independent public policy organization, focuses on the role competitive markets play in providing for the economic and social well being of all Canadians. Canadians celebrated Tax Freedom Day on June 28, the date they stopped paying taxes and started working for themselves. Log on at for an overview of the extensive research articles that are available. This month, read up on measuring hospital care.

                      The Heritage Foundation,, founded in 1973, is a research and educational institute whose mission is to formulate and promote public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values and a strong national defense. The Center for Health Policy Studies supports and does extensive research on health care policy that is readily available at their site. This month, read up on the question of the week, What Would Reagan Do.

                      The Ludwig von Mises Institute, Lew Rockwell, President, is a rich source of free-market materials, probably the best daily course in economics we've seen. If you read these essays on a daily basis, it would probably be equivalent to taking Economics 11 and 51 in college. Please log on at to obtain the foundation's daily reports. Be sure to read Consumer Protection or Legal Extortion? You may also log on to Lew's premier free-market site at to read some of his lectures to medical groups. Learn how state medicine subsidizes illness or find out why anyone would want to be an MD today.

                      CATO. The Cato Institute ( was founded in 1977 by Edward H. Crane, with Charles Koch of Koch Industries. It is a nonprofit public policy research foundation headquartered in Washington, D.C. The Institute is named for Cato's Letters, a series of pamphlets that helped lay the philosophical foundation for the American Revolution. The Mission: The Cato Institute seeks to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets and peace. Ed Crane reminds us that the framers of the Constitution designed to protect our liberty through a system of federalism and divided powers so that most of the governance would be at the state level where abuse of power would be limited by the citizens' ability to choose among 13 (and now 50) different systems of state government. Thus, we could all seek our favorite moral turpitude and live in our comfort zone recognizing our differences and still be proud of our unity as Americans. Michael F. Cannon is the Cato Institute's Director of Health Policy Studies. This month, be sure to read How to Fix Healthcare Delivery.

                      The Ethan Allen Institute,, is one of some 41 similar but independent state organizations associated with the State Policy Network (SPN). The mission is to put into practice the fundamentals of a free society: individual liberty, private property, competitive free enterprise, limited and frugal government, strong local communities, personal responsibility, and expanded opportunity for human endeavor.

                      The Free State Project, with a goal of Liberty in Our Lifetime,, is an agreement among 20,000 pro-liberty activists to move to New Hampshire, where they will exert the fullest practical effort toward the creation of a society in which the maximum role of government is the protection of life, liberty, and property. The success of the Project would likely entail reductions in taxation and regulation, reforms at all levels of government to expand individual rights and free markets, and a restoration of constitutional federalism, demonstrating the benefits of liberty to the rest of the nation and the world. [It is indeed a tragedy that the burden of government in the U.S., a freedom society for its first 150 years, is so great that people want to escape to a state solely for the purpose of reducing that oppression. We hope this gives each of us an impetus to restore freedom from government intrusion in our own state.]

                      The St. Croix Review, a bimonthly journal of ideas, recognizes that the world is very dangerous. Conservatives are staunch defenders of the homeland. But as Russell Kirk believed, war time allows the federal government grow at a frightful pace. We expect government to win the wars we engage, and we expect that our borders be guarded. But St Croix feels the impulses of the Administration and Congress are often misguided. The politicians of both parties in Washington overreach so that we see with disgust the explosion of earmarks and perpetually increasing spending on programs that have nothing to do with winning the war. There is too much power given to Washington. Even in war time we have to push for limited government - while giving the government the necessary tools to win the war. To read a variety of articles in this arena, please go to

                      Hillsdale College, the premier small liberal arts college in southern Michigan with about 1,200 students, was founded in 1844 with the mission of "educating for liberty." It is proud of its principled refusal to accept any federal funds, even in the form of student grants and loans, and of its historic policy of non-discrimination and equal opportunity. The price of freedom is never cheap. While schools throughout the nation are bowing to an unconstitutional federal mandate that schools must adopt a Constitution Day curriculum each September 17th or lose federal funds, Hillsdale students take a semester-long course on the Constitution restoring civics education and developing a civics textbook, a Constitution Reader. You may log on at to register for the annual weeklong von Mises Seminars, held every February, or their famous Shavano Institute. Congratulations to Hillsdale for its national rankings in the USNews College rankings. Changes in the Carnegie classifications, along with Hillsdale's continuing rise to national prominence, prompted the Foundation to move the College from the regional to the national liberal arts college classification. Please log on and register to receive Imprimis, their national speech digest that reaches more than one million readers each month. This month, read Margaret Thatcher: A Legacy of Freedom. The last ten years of Imprimis are archived.

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Del Meyer

Del Meyer, MD, Editor & Founder

6945 Fair Oaks Blvd, Ste A-2, Carmichael, CA 95608

 Words of Wisdom

If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. -Milton Friedman, Nobel Laureate 

The size of the future you actually experience will largely be determined by one factor: the people you choose to connect with. -Dan Sullivan, Speaker and coach to entrepreneurs

Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.  -Dale Carnegie, an American writer and lecturer

Some Recent Postings

HEALTH CARE CO-OPS IN UGANDA - Effectively Launching Micro Health Groups in African Villages, by George C. Halvorson

A CALL TO ACTION - Taking Back Healthcare for Future Generations by Hank McKinnell

PUTTING OUR HOUSE IN ORDER - A Guide to Social Security & Health Care Reform by George P. Shultz and John B Shoven

In Memoriam

Arthur Galston, botanist, died on June 15th, aged 88

IT WAS the mangroves he noticed first, reduced to cobwebbed wraiths as far as the eye could see. The mud around them was clogged with their leaves, and the shellfish in it were dead. Then he saw the hills, once thick with teak trees, shaved bald like an old man's skull. He could have seen worse: children with monstrous lolling heads and palsied, tiny limbs, adults with gnarled growths erupting from their bellies. But these were hidden away in the hospitals. The trees were less adept at concealment.

What had been sprayed on them was millions of gallons of a herbicide known as Agent Orange. Fixed-wing aircraft flew over the jungles of Vietnam in swarms, dumping the stuff, which then drifted over crops and into villages. The food that was destroyed might have fed 600,000 people for a year. But it was perfectly harmless to people, said America's military men. They kept down the grass at bases with it, and the GIs hosed each other with it for fun. And there was no better strategy, at the height of the conflict in the 1960s, than to strip bare the river banks and forest trails where the Vietcong fought their war.

Arthur Galston was less sanguine. If you had asked him, on one of his visits to Vietnam in those years, whether Agent Orange was directly responsible for the sarcomas, lesions and deformities, he would have replied, like the careful scientist he was, that it was hard to make a connection solid enough to stand up in a court of law. But three things he was sure of. First, Agent Orange had caused "an ecological disaster" that might take decades to repair. Second, its use contravened the Geneva protocols against chemical and biological warfare. And third, he had a responsibility to speak, because this agent of horror was partly his child.

The birth had been accidental. As a young graduate student at the University of Illinois in 1943, he had been studying ways to make soyabeans - then a new crop plant from China - flower and set their pods earlier in the season, before the winter frosts. A mild spray with 2,3,5-triiodobenzoic acid brought them on nicely; but a stronger dose caused the plants to release ethylene, which digested the cell wall between leaf and stem and defoliated them.

Though Mr Galston soon had to go off to war himself, and then got sidetracked on the effort to find a new plant substitute for rubber, it did not occur to him that his discovery had military uses. It might, perhaps, be helpful to farmers. He was a botanist, who once spent a happy year in Stockholm isolating catalase from spinach leaves, and who patiently observed "rhythmic opening and closing in the dark in the plant Albizzia". He believed in the inherent beauty and usefulness of science. On the other hand, he knew that any discovery was morally neutral. Society might apply it to good or evil ends.

As a plant physiologist, he was also aware that the life of plants was far from serene. They strained after light and water and struggled to cope with stress, of the sort that had made his soya seedlings drastically shed their leaves. They competed for food and saw off enemies. He watched oat seedlings warn each other of danger by releasing jasmonate acid, and tracked the dropping of poisoned leaves by the Sonoran brittlebush to ward off competition. But this did not mean, when the men from the chemical warfare unit at Fort Detrick started to exploit his findings in the 1950s, that he was happy to help wage war through and against plants.

Unanswered letters

The new potentised strain of his discovery appalled him, and the more so because it contained dioxin as a by-product of manufacture. The toxicity of dioxins was not then well understood, but Mr Galston had his fears from the beginning. From 1965 onwards, as the use of Agent Orange relentlessly increased in Vietnam, he lobbied both his scientific colleagues and the government to stop. Lyndon Johnson would not answer his letters; but Richard Nixon, faced with more suggestive statistics on the human cost from the Department of Defence, eventually agreed. In 1970 the spraying stopped. The ecological damage, and the cries for compensation from sick civilians and soldiers, continue to this day. . . .

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On This Date in History - July 15

Today is St. Swithin's Day. Legend has it that if it rains today, it will continue to rain for 40 days. If, on the other hand, it remains fair for St. Swithin's, it will rain no more for the next 40 days. Saint Swithin was the Bishop of Winchester, England.

On this date in 1606, Rembrandt Harmens van Rijn, a man commonly accepted today as one of the greatest artists of all time, was born, in Leyden, Holland. He came of a well-to-do family, and in his time, he was highly acclaimed for his paintings; but he outlived his time. He went broke. He kept on working as an artist, producing some of his greatest work; but the public had passed him by. When he died, his greatness seemed to be behind him. Of course it didn't work out that way at all. In the intervening centuries, the greatness of Rembrandt has grown and flourished.

After Leonard and Thelma Spinrad



Logan Clements, a pro-liberty filmmaker in Los Angeles, seeks funding for a movie exposing the truth about socialized medicine. Clements is the former publisher of "American Venture" magazine who made news in 2005 for a property rights project against eminent domain called the "Lost Liberty Hotel."
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