Virtual Medical Devices and Vendor Liabilities

My essay "Virtual Medical Devices and Vendor Liabilities" was published at the HisTalk website, a website that serves as a healthcare IT industry news/gossip/watchdog site.

It addresses the hold-me-harmless, business IT-type claims made to Sen. Grassley by some healthcare IT vendors that they are "not liable when harm or loss results from the client’s use of the product in diagnosing and/or treating patients" (as indicated in Sen. Grassley's question #9 to hospitals here).

This is a somewhat absurdist claim, since these systems are not exactly sold to allow clinicians to play Super Mario:

Play games with our EMR, but use it to diagnose and treat patients at your own risk!

I make the point in my essay that an EMR and other clinical IT systems are virtual medical devices, that is, medical devices that happen to reside on a computer, and that healthcare IT vendors are indeed practicing medicine by cybernetic proxy (e.g., in provision of alerts and reminders and clinical decision support).

I also pointed out that a vendor claiming they are not liable when harm or loss results from the client’s use of the product in diagnosing and/or treating patients should put that disclaimer on every screen of their products.

Ultimately, I opine that if a healthcare IT vendor claims to be a partner to clinicians and clinical medicine, they should be willing to accept the responsibilities that accompany such a position and their claims of omnipotent ecstasy about healthcare IT "transforming" or "revolutionizing" healthcare.

See the essay at this link.

-- SS

Noticing the Elephant in the Room: Bigger Hospital Networks Charge More for the Same Service

We recently discussed a report on hospital prices here in Rhode Island, which showed that hospitals that are part of hospital systems were paid more for the same services than independent hospitals.  The price differences could not be explained by quality of care or severity of illness.  The results suggested that market power determines the price of hospital services, and that increasing concentration of power in hospital networks is likely to further increase costs, without improving quality of care. 

The end of last week, a similar report out of the neighboring state of Massachusetts was announced.  As reported by Liz Kowalczyk in the Boston Globe,

Massachusetts insurance companies pay some hospitals and doctors twice as much money as others for essentially the same patient care, according to a preliminary report by Attorney General Martha Coakley. It points to the market clout of the best-paid providers as a main driver of the state’s spiraling health care costs.

The yearlong investigation, set to be released today, found no evidence that the higher pay was a reward for better quality work or for treating sicker patients. In fact, eight of the 10 best-paid hospitals in one insurer’s network were community hospitals, which tend to have less complicated cases than teaching hospitals and do not bear the extra cost of training future physicians.

Coakley’s staff found that payments were most closely tied to market leverage, with the largest hospitals and physician groups, those with brand-name recognition, and those that are geographically isolated able to demand the most money.

While market power predicted pricing, quality of care and severity of illness did not.

The report shows that a small group of about 10 hospitals statewide command significantly higher payments than the other 55, ranging from 10 to 100 percent more than their competitors for similar work.

While academic medical centers are widely thought to be the most costly, the report noted that one major teaching hospital that treats some of the state’s sickest patients was paid less than dozens of others with healthier patients.

The investigation also discovered that hospitals that treat large numbers of poor patients, who can be more expensive to care for, are as a group paid 10 percent to 25 percent less than average by commercial insurers.

Finally, the report showed that increasing prices per unit of service, not increasing amounts of service, accounted for most of the rising costs of hospital care.

Coakley’s investigators found that Massachusetts health care costs, which are growing by 7.5 percent annually, are mostly the result of rising prices, not patients getting more imaging tests, surgery, and other procedures. For one major insurer, provider price increases accounted for 80 percent of the total growth in medical expenses between 2006 and 2009.

We have tried to encapsulate the concerns that motivated starting the Health Care Renewal blog as "concentration and abuse of power" in health care. Here is a stark of example of that.

Lots of hospital insiders have tried to sell increasing concentration of power among hospitals as a way to decrease costs, improve quality, and improve access. The American experience going back to the 19th century, however, has been that market concentration increases costs regardless of quality or access. The two reports from Rhode Island and Massachusetts suggest that as hospitals combine in hospital systems, and these systems become more oligopolistic, costs, but not quality or access increase.  Of course, the insiders within the system are likely to keep selling the idea, because their pay doubtless goes up as the system gets bigger.

As I have said many times, real health care reform will require reversing the trend towards concentrated power, maybe most directly by breaking up oligopolies such as large hospital systems, and changing health care organizations' leadership and governance to reduce the incentives to expand regardless of how expansion affects patient care.