Mark Kelley
Henry Ford Medical Group C.E.O.

Mark Kelley

Mark A. Kelley, M.D., is executive vice president for Henry Ford Health System and chief executive officer of the Henry Ford Medical Group.

We Must Threaten the Status Quo

The health-care reform spotlight has shifted from taxes to cost savings. The danger is that Congress will fall back to old habits and make its usual cuts to physician fee schedules, medical education, social programs, etc. The "big ticket" opportunities lie elsewhere:
• Tort reform in California and Michigan has markedly reduced malpractice costs while preserving payment for just claims.
• We pay too much for pharmaceuticals. Like other countries, our government needs to negotiate major discounts
• Our infatuation with medical technology is breaking the bank. Like Great Britain, we should only support technology that is both effective and affordable.
• We should not pay for mistakes like preventable errors or hospital re-admissions due to poor outpatient follow-up.
• The current payment system needs to stop rewarding the volume of services, whether in the hospital or the doctor's office. There is little incentive for quality, efficiency, or prevention. For that reason, Massachusetts has proposed shifting its state-wide program to capitation -- a fixed annual payment for each patient. This arrangement penalizes unnecessary care and encourages cost-effective practice.
• We have positioned end-of-life care as a heroic rescue mission rather than a dignified exit from the stage of life. Other societies do not subject their loved ones to ineffective and expensive treatment in their final days. Neither should we.

These proposals already have drawn political fire because they threaten the status quo. However, as the saying goes, "when you see the flak, you are over the target".


By Mark Kelley  |  July 21, 2009; 9:31 AM ET  | Category:  Health Care Reform , Health costs Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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We are not going to find conclusive resolution to this controversy but here are some additional papers:
--go to MSMS website for the newspaper articles on the Michigan malpractice premium experience.
--Dartmouth group reports Medicare imaging costs are higher in higher litigation locales (Health Affairs 26:841)
--Harvard group reports substantial defensive medicine in Pennsylvania (JAMA 293:2609)
--same group documents costs of filing, settling malpractice claims is exorbitant and a clear cost to the health system.(NEJM 354: 2024)
--medical malpractice accounts for 2-10% of practice costs (Health Economics 2009, Apr 27 on line)

Posted by: Mark Kelley | July 28, 2009 10:48 PM
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We are not going to find conclusive resolution to this controversy but here are some additonal papers:
--go to MSMS website for the articles on the Michigan malpractice premium declines.
--Dartmouth group reports Medicare imaging costs are higher in higher litigation locales (Health Affairs 26:841)
--Harvard group reports substantial defensive medicine in Pennsylvania (JAMA 293:2609 )
--same group documents costs of filing, settling malpractice claims is exorbitant and a clear cost to the health system.(NEJM 354: 2024)
--medical malpractice accounts for 2-10% of practice costs (Health Economics 2009, Apr 27 on line)

Posted by: Mark Kelley | July 28, 2009 10:46 PM
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Dr Kelly, thank you for your reply. I have searched the Detroit News and the Detroit Free press, but have been unable to find anything other than letters or opinion pieces. Perhaps you would care to comment on the book I referenced, or on the excerpt from the article on the California experience I quoted. This is from an article that appeared in the Minneapolis Star Tribune, January 10, 2005. Here is another quote from the same article:

"Medical malpractice insurance accounts for a tiny percentage of overall health care spending, less than 2 percent. And that percentage is falling because insurance rates have been rising at less than half the rate of increase in health costs.

Since 1996, the number of malpractice claims has been flat. The average payout has increased only slightly."

I would also be interested in your explanation of why the CBO (and others) found no reductions in test and treatments in states with draconian restrictions on malpractice suite as compared with those states with none.

Thank you.

Posted by: lensch | July 26, 2009 10:13 PM
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Michigan's reform was instituted in the 1990s and consistently upheld by the Michigan Supreme Court. Michigan's medical malpractice premiums have fallen for the past few years--as much as 25% for some specialties. This lag is understandable. Litigation has a long lead time and premiums reflect pending as well as new cases. In many states without tort reform, premiums are escalating. For more details, suggest articles in the Detroit Free Press and Detroit News in 11/07, as well as contacting the Michigan State Medical Society, which is expert on the subject.

One final comment--it is hard to quantify the cost of "defensive medicine"--but it is real and every doctor practices it. No other professional in our society has as much individual exposure to litigation as a physician. He or she will do everything for every patient to reduce that risk. That perception will only change if physicians feel that appropriate care is rewarded--and defended.

Posted by: Mark Kelley | July 26, 2009 6:12 PM
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"The latter has had very effective tort reform (not insurance reform), resulting in substantial decline in claims, awards, and malpractice costs."

Dr Kelly, Could you please give some references on the experience in MI? When were these tort reforms institued? A 2005 study by the U of MI showed that MI had the third highest malpractice premiums in the nation although they remarked that the difference between most states was small. This would accord with the results I quoted below. BTW the same was true if you restrict to OB/GYN's.

Posted by: lensch | July 24, 2009 4:17 PM
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Thanks for the comments. A few more details to consider:

--on tort reform, I have considerable experience in two states--Pennsylvania and Michigan. The latter has had very effective tort reform (not insurance reform), resulting in substantial decline in claims, awards, and malpractice costs. In Pennsylvania, these costs are out-of-control and have forced many physicians, especially OB-Gyn specialists to leave the state. These experiences are real-life examples of how this issue plays out on the front-lines.

on end-of life care--the decisions should be made by the patients but they should fully informed of their options. As an intensive care specialist, I have found that patients and families often have an incomplete perspective on prognosis and the value of any therapy. Research has when that when armed with these facts, patients often reject high-tech care. As care-givers, we need to improve education of our patients.
--on the payment system, we already have systems that provide excellent care in such pre-payment--the Kaiser system, Henry Ford Health System and some others. These patients are highly satisfied because they have chosen an organized system of care, not an HMO arrangement. There is a big difference between buying your care from a delivery system and purchasing an insurance contract that leaves you to meander through the jungle of health care delivery.

Posted by: MarkKelleyMD | July 23, 2009 12:44 PM
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I am afraid that what happened in California shows the opposite of what you reported. Tort reform does not affect malpractice premiums; Insurance reform does. Here is what happened:

"In 1975 doctors in California protested rising malpractice insurance premiums by staging a sit-in at the statehouse. Alandmark law was passed capping pain and suffering awards at $250,000. Similar measures were later copied in more than
20 states.
In the first 10 years after California’s Medical Injury Compensation Reform Act of 1975 was passed, malpractice rate
increases in that state were about the same as the national average.
Only after Proposition 103 passed in 1988 did malpractice insurance rates, and other insurance rates decline in California
while they increased nationwide. Proposition 103 instituted insurance reforms not tort reform. It immediately rolled
back insurance rates and disallowed unnecessary costs like excessive expenses, bloated executive sales and bad faith
lawsuit costs. Proposition 103 also required insurers to open their books to justify rate increases. For the first time insurers
were provided with financial incentives for efficient performance rather than simply being able to pass on costs to consumers."

Here are more general facts on the Malpractice Myth.

1. The total of all malpractice insurance premiums amounts to 0.56% of health care costs.
2. The CBO has examined the idea of defensive medicine. They found no difference in practice between states with limits on tort settlements and those with no limits.
3. There is no correlation between the price of malpractice premiums and the amount given out in malpractice settlements.
4. The price of premiums does (anti) correlate with interests rates.
5. If you take all the money given out in malpractice settlements over $250,000 in NJ ( a state without caps) in a year and give it to physicians, each doctor would get $15.

These come from the book The Malpractice Myth by Peter Baker (U of Chicago Press)

Thus the doctors are wrong on almost every count. Malpractice premiums are not a significant factor in health costs. Physicians order unnecessary tests and treatments even when there are draconian limits on lawsuits as in Texas. Caps would save us nothing. The price they pay for insurance has nothing to do with the large settlements given out, and the total amount of money involved in these settlements is trivial. What they believe is a fantasy.

Posted by: lensch | July 22, 2009 2:52 PM
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Here is an article about expensive care given to a 97 year old. Was it the right thing to do?

For America's aged, surgery at any price? (Philadelphia Inquirer)
Should a 97-year-old man undergo an expensive, dangerous open-heart operation to repair a lethal tear in a main artery of his heart? No, concluded the patient, Michael DeBakey, the world-famous cardiovascular surgeon who pioneered the operation. Yes, said his family and surgeons, who prevailed after DeBakey lapsed into coma. DeBakey later said they did the right thing. After a long, touch-and-go recovery, he resumed a busy schedule before his death last July at age 99. Age is no longer the deciding factor, even for invasive treatment such as open-heart surgery.

Posted by: jke1 | July 22, 2009 8:46 AM
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Dr. Kelly, I agree their must be changes. But it is interesting that you are presenting 'capitation' as an answer. This worked well with HMO's in the 80's and 90's and kept healthcare costs and insurance rates in check. But society did not like it due to the perception that doctor's were rationing care in order to 'save' money that they then would get instead of being used for the patient. Once HMO's were no longer popular health care costs began to spiral upwards. How would the Mass. program be different?

Also, while your argument about end of life care seems compassionate, you are disconnected in your writings from reality. Any patient can refuse treatment, choose 'DNR', have hospice care, etc. if they wish to die with 'dignity' or they wish to 'save' money. But it is not humane to not fully treat anyone who wants to live, no matter the odds. My father is in this situation right now with advanced lung cancer. Although his chances are slim he does want to live to see his great-grandaughter born. Who are we to say that we should not afford him this opportunity?

Finally, your efforts at Henry Ford prove to me that even in the worst of economies that world class treatment can be provided with no layoffs, continued building campaigns, and meeting budget projections. It can be done without a complete overhaul of the healthcare system. You should stop touting a national overhaul and start touting what you have accomplished at Henry Ford as an example of success with the current U.S. system.

Posted by: jke1 | July 22, 2009 8:41 AM
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