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20 perverse incentives and stupid things in health care services

Here is our New Year list of stupid things in health care services. It comes with a stupidity index where 10 is very stupid and an Easy to Fix index where 1 is very easy and 10 is all but impossible. Please give us your comments (in confidence!) and let us know of any additions you may have. Just email max@healthcarebusinessinternational.com.

1) Poland. Family doctors have to pay for lab tests out of their consultation fee. Result? Massively lower number of commissioned tests. Stupidity scale 10. Easy to fix: 1

2) Switzerland. Family and specialist doctors can carry out their own lab tests in their consulting practices. Result? Many more tests! Stupidity scale 10. Easy to fix: 1

3) UK Dentists get paid the same amount for root canal as for dental extraction. Result? A massive shift towards dental extraction and away from time-consuming root canal. Stupidity scale 9. Easy to fix: 2

4) UK and general. NHS trusts generally purchase medtech independently. Result? Massive price differences for the same product, a marked unwillingness for trusts to share their prices as they think they confer “competitive advantage” and the duplication of procurement teams across several hundred organisations. Stupidity scale 10. Easy to fix: 6

5) Germany. Home care operators are still paid as distributors of medical goods. Result? Services which accompany the product are unvalued ancillaries. Stupidity scale 10. Easy to fix: 6

6) Germany. DRGs for outpatient surgery are set so low that hospitals fight to do as much work as possible as inpatient. Result? Failure to move expensive inpatient work to the outpatient arena and low levels of ambulatory surgery. Stupidity scale 10. Easy to fix: 7

7) Brazil. Attempts by health insurers to query overactivity often lead to legal cases. Insurers say that judges side with doctors 99% of the time, making it impossible to eliminate overactivity. Stupidity scale 9. Easy to fix: 9

8) China and many other emerging markets. Hospitals receive half their income from the resell of drugs leading to massive overprescription and overtreatment, with doctors given prescription targets. Whilst a recent Chinese law outlawed the practice, reimbursement levels have not been reformed and so the practice continues there. Doctors in many Emerging Markets have similar targets. Stupidity scale 10. Easy to fix 8.

9) Common across the world, particularly in the Middle East, India, Brazil and sometimes within the private hotelier hospital sector across Europe. Failure by insurers to seriously query bills or to report doctors for fraud leads to massive overtreatment and “the ATM business model” in which operators set out to systematically max out insurance policies. Stupidity scale 10 Easy to fix: 6 (but getting easier as AI is deployed).

10) Everywhere. Demands that chronic disease management programmes should be assessed as stringently as drug approval with double blind trials. Result? Leads to failure to adopt such programmes and so to massive extra treatment costs. Stupidity scale 6 Easy to fix: 5

11) Everywhere. Siloing in medicalised homecare means that it is all but impossible for operators to develop a holistic service which offers payors a complete menu ranging from the supply of oxygen through to nursing and product supply. Result? Leads to inefficient, expensive services which do not meet the needs of patients. Stupidity scale 9 Easy to fix: 7

12) USA, Mexico, Emerging Markets. Pharmacies offer cut-price primary care consultations. Result? The consultations are paid for by systematic overprescription. Stupidity scale 9 Easy to fix: 6

13) Germany, Emerging Markets. Hospital groups buy primary care networks to increase referrals. Result? Primary care doctors in these facilities are likely to refer patients more frequently, leading to unnecessary and expensive overtreatment. Stupidity scale: 9 Easy to fix: 3

14) Germany, Brazil, Emerging Markets. Patients are allowed to go directly to specialist doctors. Result? Danger of over- and wrong treatment. Stupidity scale 6 Easy to fix 9

15) Almost everywhere. Allowing the private sector to cherry pick activities which are overly high margin or operations which pay a lot. Result? Poor value for money, but what do you expect entrepreneurs to do? Stupidity scale: 10 Easy to fix: 5

16) Failure of international policymakers to share the detailed stuff on remuneration and tariffs. Result? Massive discrepancies in prices paid for medical procedures. Stupidity scale: 10 Easy to fix: 4

17) UK and everywhere. Silos between social and acute care. Result? Patients stay in expensive hospital beds far longer than they should. Stupidity scale: 10 Easy to fix: 3 (Just start charging overstays in hospital beds to the municipalities as is now done in Sweden after three days)

18) Emerging markets and everywhere else. Highly complex, property-focused PPPs/PFIs where costs extend forward for decades. Result? Massive over-expenditure and big consultancy fees. Stupidity scale 8 Easy to fix: 5

19) Everywhere Failure to outsource medical service functions such as dialysis, labs or imaging to expert operators. Result? Costs are 10-15% higher than they should be. Stupidity scale: 8 Easy to fix: 9

20) Everywhere. Failure to deploy large-scale competitive tenders with strong built-in quality standards. Result? Overpayment on standard tariff terms.Stupidity scale: 9 Easy to fix: 6

21) UK.  Surgeons with long NHS waiting times get more private practice, so they don’t have an incentive to be efficient in their NHS practice.  Stupidity scale 10.  Easy to fix 5.

We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.