Overkill Healthcare

Abstract

The Overkill case study discusses issues around low-value care and ways of minimizing healthcare costs while increasing the quality of output. Low-value care is the administration of health interventions whose costs or harms exceed benefits. It arises from information asymmetry between the doctor and their patient. The doctor has a lot of knowledge on treatment plans, while the patient has little knowledge and relies fully on the doctor’s recommendations. The doctor’s decision to offer low-value care is a form of moral hazard. All the same, the inclination to offer low-value care could be minimized through adopting capitation compensation systems to replace fee-for –service systems. The latter encourage physicians to focus on the quantity of care rather than the quality of care, thus heightening the need to offer low-value care. This assignment uses the information in the case to answer questions on why people receive low-value care, issues associated with overdiagosis, and the different forms of health management organizations.

Case Study: The Overkill Case

Introduction of Topic and Facts of the Case

The ‘Overkill’ case study addresses the moral hazard of low-value care, which is the unfortunate idea that millions of patients are forced to pay for operations, drugs, and tests that will not make them any better. The author provides several examples of low-value care cases in which medical personnel prescribed one or more of twenty-six useless treatments and tests that added healthcare costs to patients but had no impact on health improvement. Medicare patients are the most likely victims of low-value care, with studies indicating that on average, 25 to 42 percent of patients receive some form of test or treatment that pushes costs up but has little effect on health improvement. Unfortunately, some of these decisions could harm patients in the long-run. For instance, frequent CT scans expose patients to the risk of developing cancer.

The author attributes the tendency to offer low-value to information asymmetry. Medical professionals know more about tests and medical plans than their patients, who have little knowledge and fully trust their doctors’ decisions. Medical professionals thus take advantage of the patients’ lack of information to enhance their incomes by prescribing unnecessary tests and medications. Insurers attempt to address this moral hazard by refusing to pay for costs that seem unnecessary. However, it is challenging to differentiate between the necessary costs and the exaggerated ones. Coverage limitations could cause death if patients are unable to access crucial healthcare services. Large organizations such as Wal-Mart have come up with more creative ways to foster quality healthcare for their employees at low costs. The company works with specific trustworthy healthcare providers in an accountable care organization to increase employees’ access to quality, affordable healthcare.

A summary of the Areas Pertinent to the Course

The case study demonstrates three concepts discussed in the course text: moral hazard, adverse selection, and information asymmetry. Information Asymmetry is a situation in which one party in a transaction has more information or knowledge than the other (Lee, 2019). The Overkill case demonstrates information asymmetry between doctors and patients. Doctors have more information on treatment plans than patients, who have little knowledge and fully rely on their doctors’ diagnoses and treatment plan recommendations.

A Moral hazard exists when a party takes advantage of information asymmetry to benefit itself at the expense of the other party because it enjoys protection and the other party will bear the burden. In the ‘Overkill’ case, insured patients engage in moral hazard when they fail to seek a second opinion from another doctor and instead opt to take up tests and costly procedures immediately they are prescribed because the insurer covers the cost. At the same time, doctors engage in moral hazard when they impose more expensive treatment plans on Medicare patients than they would if patients were not covered. The author mentions that 25 to 42 percent of Medicare patients receive some form of overtreatment or over-testing that pushes costs up but has little effect on health improvement. Doctors also engage in moral hazard when they prescribe unnecessary treatment plans and tests, thus benefiting themselves at the expense of the patients. In some cases, these unnecessary treatment plans can be harmful to patients. For instance, regular CT scanning increases the risk of developing cancer.

The moral hazard problem then gives rise to adverse selection, which occurs when organizations cannot distinguish between low-risk and high-risk clients, leading them to take action that disadvantages all parties (Lee, 2019). The course book discusses adverse selection in the context of insurance coverage in chapter three. Since insurance companies cannot distinguish between low-risk and high-risk clients, they charge everyone a higher premium. In the ‘Overkill’ case, adverse selection arises when insurance companies impose limits on coverage and decline to cover some costs because they cannot tell which costs are necessary and which ones are exaggerated.

A Detailed Case Discussion

What is low-value care?

Low-value care is the administration of health interventions whose costs or harms exceed benefits (Chua, 2022). An example of low-value care is sending a suspected thyroid cancer patient for an MRI after they have had an ultrasound. An MRI is not as effective as an ultrasound in imaging thyroid cancer. Thus, the test would only impose an additional monetary cost to the patient with no significant benefits in the diagnosis process. Another example of low-value care would be taking a patient for an operation that eventually does not make them feel better. Chua (2022) gives several examples of low-value care in children, including prescribing antibiotics to treat flu and common cold. Flu and common cold are viral infections and would not respond to antibiotics, which implies that ultimately, the prescription would not benefit the patient. On the contrary, it increases the cost of healthcare and places the patient at risk of developing resistance to the prescribed brand.

Why do people get low value care?

There are several reasons why people would get low-value care. In the Overkill case, patients get low-value care as a result of doctors engaging in moral hazards. In this case, doctors prescribe low-value care in the form of unnecessary treatments and tests to benefit themselves by getting patients to pay more than they need to. This is particularly the case in fee-for-service regimes, where doctors charge each service they perform separately and are reimbursed based on how much the patient pays (Mafi & Parchman, 2018). To address low-value care resulting from this, hospitals could adopt the capitation healthcare reimbursement model in place of the fee-for-service model (Mafi & Parchman, 2018). Capitation reimbursement is where doctors are reimbursed a fixed amount for each patient allocated to them, whether or not the patients seek treatment (Mafi & Parchman, 2018). This would reduce the inclination to offer more care, which increases the risk of low-value care.

In other cases, a patient may get low-value care because of misdiagnosis resulting from inexperience on the part of the doctor, negligence, or inadequate information on symptoms. For instance, one of the author’s patients in the case reportedly underwent an operation to remove a bothersome lump, but what the doctor removed was not the lump. This could be a case of either negligence or inexperience by the doctor. Patients could minimize this risk by always seeking the opinion of a second physician before undertaking major surgeries and other costly treatment plans (Ganguli et al., 2021).

The author of the case argues that in some cases’ doctors offer low-value care because of the pressure patients impose. The author reckons that most patients are more comfortable when the doctor does ‘an extra test’ because they associate additional tests with thoroughness. This mind-set encourages the doctor to prescribe unnecessary tests in an attempt to satisfy the customer and validate themselves.

Why is overdiagnosis a problem?

Overdiagnosis is the diagnosis of conditions that would never have caused problems in one’s lifetime (German Institute for Quality and Efficiency in Healthcare, 2006). Overdiagnosis is not a problem as long as it leads to the discovery of a condition that is easily treatable (German Institute for Quality and Efficiency in Healthcare, 2006). However, overdiagnosis can often lead to the discovery of serious illnesses such as cancer, which could have serious implications on quality of life and well-being. The discovery will attract psychological distress and overtreatments (unnecessary treatment) when perhaps the condition would not have bothered the patient in their lifetime if left untreated (German Institute for Quality and Efficiency in Healthcare, 2006).

Explain rabbits, birds, and turtles. Rabbits, birds, and turtles are used in the case to demonstrate how cancers and other illnesses behave. Depending on where it is localized, each cancer has its share of birds, rabbits, and turtles. Bird-like cancers such as colon and cervical cancers progress fast and will have taken flight by the time they are discovered. Rabbit-like cancers progress relatively slowly and could still be curbed before they spread, while turtle-like cancers progress too slowly and are not life-threatening. Early detection could help prevent death in case of bird and rabbit-like cancers, but tit could trigger unnecessary overtreatment in turtle-like illnesses.

What has happened to the death rate from thyroid cancer? Thyroid cancer diagnosis rates have increased, but the death rate has continued to rise. This is because thyroid cancer, like breast cancer, is a turtle-like cancer. It progresses slowly and is not life-threatening in most cases. It is only identified through overdiagnosis, in which case doctors cause more harm by trying to treat it. Most thyroid cancer patients die as a result of problems related to unnecessary treatments that end up significantly affecting patients’ quality of life and well-being.

Describe what happened to Taylor

Taylor injured his back while working on his lawn. His primary care physician ordered an MRI, which showed degenerative disk disease. The PCP referred him for surgery to fix the bulging section of the spine. Taylor engaged in lower back exercises for several weeks and finally decided to undergo surgery after the situation failed to improve. Unable to raise finances for the surgery, Taylor opted for Wal-Mart wellness program for employees undergoing heart, spine, or transplant procedures. He was attached to the Virginia Mason Medical Center. The head neurosurgeon at the Center, however, refused to carry out spine surgery arguing that Taylor’s case did not meet their threshold for surgery. He explains that disk disease takes the turtle form, which means it does not cause any harm. Thus, surgery was unnecessary as non-surgical treatments would still help ease the pain. Taylor began non-surgical treatments and reports that several weeks later, the pain had cleared.

What is this sort of program called? The program into which Taylor enrolled is a form of accountable care organization, where providers come together to improve patient outcomes and reduce healthcare spending for a financial incentive (Lee, 2019).

What might it do to cost and quality? Accountable care organizations are created to decrease healthcare costs for enrollees while increasing the quality of services offered. Taylor did not incur any out-of-pocket costs for the care he received under the program, yet he received better quality care and even avoided an unnecessary spine surgery.

What’s an alternative? Wal-Mart could alternatively consider a staff model health maintenance organization (HMO) (Lee, 2019). This would involve hiring staff physicians to offer quality, yet affordable healthcare services to employees. In this case, the staff physicians are bound by certain quality and cost standards just like in the accountable care organization (Lee, 2019). However, the physicians are the company’s employees and are not attached to a different employer as in the current model.

What happened in McAllen?

The author conducted a study comparing costs in McAllen with El-Paso, both border towns within Texas with comparable development and poverty levels. The results showed that McAllen had twice El-Paso’s per-capita Medicare costs. Doctors in McAllen were ordering more of procedures, surgeries, admissions, and diagnostic tests. McAllen was operating a fee-for-payment compensation regime, which compensated doctors based on the quantity of care they gave and thus. Thus, the doctors operated on a profit-maximization culture, notwithstanding that they owned some of the imaging centers and healthcare agencies where patients were sent for healthcare services. Since the passage of the Affordable Care Act, per-capita Medicare costs have flattened out. The county’s Medicare costs per patient reduced by $3,000 between 2009 and 2012 as a result of the policy change. Hospital admissions reduced by 10 percent while ambulance rides, initially the highest in the country, reduced by 40 percent.