Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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George Ross Fisher III M.D. : Memoirs

New topic 2018-08-23 16:15:31 description

Macroeconomics of The 2007 Collapse

Sudden wealth creation, whether from the discovery of gold or oil, the conversion of poverty into useful cheap labor, or the sudden abundance of cheap credit, is of course a good thing. Sudden wealth creation can be compared with a stone thrown into a pond, causing a splash, and ripples, but leaving a somewhat higher water level after things calm down. The globalization of trade and finance in the past fifty years has caused 150 such disturbances, mostly confined to a primitive developing country and its neighbors. Only the 2007 disruption has been large enough to upset the biggest economies. It remains to be seen whether a disorder to the whole world will result in a revised world monetary arrangement. One hopes so, but national currencies, tightly controlled by local governments, have been successful in the past in confining the damage. This time, the challenge is to breach the dikes somewhat, without letting destructive tidal waves sweep past them. Many will resist this idea, claiming instead it would be better to have higher dikes.

It is the suddenness of new wealth creation in a particular region which upsets existing currency arrangements. Large economies "float" their currencies in response to the fluxes of trade, smaller economies can be permitted to "peg" their currencies to larger ones, with only infrequent readjustments. Even the floating nations "cheat" a little, in response to the political needs of the governing party, or, to stimulate and depress their economies as locally thought best. All politicians in all countries, therefore, fear a strictly honest floating system, and their negotiations about revising the present system will surely be guilty of finding loopholes for each other; the search for flexible floating will, therefore, claim to seek an arrangement which is "workable".

In thousands of years of governments, they have invariably sought ways to substitute inflated currency for unpopular taxes. The heart of any international payment system is to find ways to resist local inflation strategies. Aside from using gunboats, only two methods have proven successful. The most time-honored is to link currencies to gold or other precious substances, which has the main handicap of inflexibility in response to economic fluctuations. After breaking the link to gold in 1971, central banks regulated the supply of national currency in response to national inflation, so-called "inflation targeting". It worked far better than many feared, apparently allowing twenty years without a recession. It remains to be investigated whether the substitution of foreign currency defeated the system, and therefore whether the system can be repaired by improving the precision of universal floating, or tightening the obedience to targets, or both. These mildest of measures involve a certain surrender of national sovereignty; stronger methods would require even more draconian external force. The worse it gets, the more likely it could be enforced only by military threat. Even the Roman Empire required gold and precious metals to enforce a world currency. The use of the International Monetary Fund (IMF) implies attempts to dominate the politics of the IMF. So it comes to the same thing: this crisis will have to get a lot worse, maybe with some rioting and revolutions, before we can expect anything more satisfactory than a rickety negotiated international arrangement, riddled with embarrassing "earmarks". Economic recovery will be slow and gradual unless this arrangement is better, or social upheavals worse, that would presently appear likely.

My Years at Stockley

For forty-six years, I drove three hundred round- trip miles from Philadelphia to Stockley, Delaware -- once a month on Saturdays. That takes a whole day, so it kind of means I spent a year at sixty miles an hour, going and coming. In Delaware, they speak of going “South of the Canal”, to indicate the little state of Delaware is actually two states or at least two cultures. North of the Delaware-Chesapeake ship canal is the posh little city of Wilmington, where most of the major New York banks are moving to enjoy the special banking laws, and where the Dupont family held majestic court over its Ivy League Camelot. Wilmington has more lawyers than anywhere or at least more white shoe patrician lawyers than anywhere. Little Delaware generated special laws for the benefit of corporations, so a whole hive of corporation lawyers generated an industry of pretending that General Motors and IBM are headquartered there. Those lawyers were once so remote from the graduates of second-rate (i.e. state rather than national) law schools making a living as plaintiff lawyers, that even the doctors in Wilmington were on cordial terms with the Wilmington lawyers.

South of the Canal was something else. I saw burning crosses on several occasions, and my trip took me past two race tracks for horses and two for beat-up jalopies that smash into each other for the fun of it. To be fair about it, I was shot at twice, once below the canal, and once in Wilmington, that's another story. The incident below the canal was not terribly spectacular; I just heard a loud noise as I drove past Elks lodge, or maybe a Moose lodge, and there was a nice round hole in my fender when I got out of the car. I suppose someone in the lodge was just careless with his gun, but it is not impossible that I had crowded a pick-up truck which retaliated with fair warning.

I met a nice lady from Rehoboth who tells me she remembers when the highway was built; before 1930 or so, there was no road connecting lower Delaware with the outside world. The native people speak with an accent which isn't quite Southern and which is said to be very close to true Elizabethan English. The area was settled by Swedes before the English came, so the people are quite handsome in a sort of Daisy Mae, L’il Abner way. The highway has an interesting history. Coleman DuPont purchased the land and built the highway at his own expense. If you know anything about rural legislatures, you can guess what happened next. He offered the highway to the State and the legislature refused to accept the maintenance costs. When he then hired his own police force to patrol the highway, the legislature reconsidered and accepted his offer to give them the highway.

My trips to this area have their destination at the Hospital for the Mentally Retarded in Stockley, Delaware. In spite of the way it is spelled, it is pronounced "Stokely". A state cop once forgave my speeding violation when I told him I had been at "Stokely". He said that in spite of my out-of-state license plates, I must be telling the truth if I knew how to pronounce it. The hospital has always kept a sign-in log in the administration building, and it is fun to see my signatures going back to 1958, month after month. I've had a couple of close calls or near-accidents on the highway which I haven't told my wife about, and on two occasions the ice or fog was so bad I had to turn around and come home without completing the trip. The trip ordinarily isn't so bad. The car is on cruise control, there are medical education tapes to play (Audio Digest, courtesy of the California Medical Association), and a sort of hypnosis makes you forget where you are going until you get there.

The medical director is a nice young fellow who has a practice in a nearby (25 miles) town and stops by for a few hours a day. Except for him, just about every resident doctor in thirty years has been foreign-born, and I would judge, very poorly paid. So, several years before I came to Stockley, someone had the idea of bringing in consultants from Wilmington, Philadelphia, and Baltimore. In the early days that was reasonably easy to do, because the hospital was filled with six hundred perfectly fascinating cases. I've seen several albinos and one thirty-year-old who was no bigger than an infant in arms. They used to have a number of cases of grotesque hydrocephalus, where the poor child grew a head larger than you could put your arms around and which would develop huge bedsores because the child couldn't move his head, let alone lift it. Because the Delmarva Peninsula has been a closed society for over three hundred years, there are lots of cases of rare inherited diseases. I have seen many cases of disorders that other doctors have only maybe read about, and I must admit I loved the experience.

But you know after you spend as much time with them as I have, they stop being interesting cases and become individuals, with names and personalities. Since the aging process is accelerated in several common diseases like Mongolism, I have known some of the patients' as little children, then as adults, and finally as dying withered victims of senility. Many times, I have watched the central agony of mental retardation; the children inevitably outlive their parents and ultimately have no one to love them except the institution.

In that role, Stockley does pretty well, although perhaps not as well as it used to do. The switch seems to have happened with the John Kennedy administration when money for the retarded became abundant. That landmark was especially memorable on a Saturday when the Russians menaced us over Cuba. I never knew we had so many eight-engined bombers as circled over the Dover Air Force Base that day. Years later, a pilot brought his son to see me, and I asked him. "Yup," he said. "we were carrying eggs, all right." "Picked them up in Alaska."Computers and the Regulation of Medicine.

Computers and the Regulation of Medicine.

George Ross Fisher, M.D.

I am going to take chance in this essay that I can hold the attention of the reader through a preamble of theory, before addressing the consequences for the practice of medicine. That seems necessary because I believe that the consequences are different from what most readers would intuitively expect and persuasion lies in first convincing the reader of the theory.

CLOSED AND OPEN SYSTEMS

There is a growing body of endeavor known as the Theory of System, which acknowledge that all events are consequences of pre-existing conditions (like the consequences of adding acid to bicarbonate in a beaker), and are thus “closed” systems. However, most events in biology and sociology are so complex that it is only possible to deal with them as “open” system, for which we substitute wisdom for scientific certainty. “Wisdom” is a set of traditions, maxims, opinions, and strategies which allow you to make predictions about the inevitable outcome of events within an open system. The teleological nature of human events was once referred to as Manifest Destiny, and realists like Talleyrand spoke of diplomacy as the art of manipulating the inevitable.

Example:

Wisdom has it that in your choice of a practice location, you should remember that “you can’t make money where it ain’t.”

And now a conclusion about the computer revolution: Since computers increase the capacity to store and manipulate detail, the computer revolution increases the number of closed systems, and shifts the scope of wisdom in decision-making from traditional areas to new subject which was formerly incomprehensible.

HIERARCHIES

In dealing with open systems, managers and executives have evolved a basic strategy; they organize manageable subunits into hierarchies. Units are organized within departments, then organized within divisions, reporting to a policy-making body. Further, because the purpose of the organizational structure is to simplify management, each level of the hierarchy is oblivious to the techniques of the level below, and is only interested in the output of the level below.

Example:

The patient paying his bill is interested in the total amount that he has to write on the “bottom line,” which in his case is the dollar amount of the check he must write

The director of the x-ray department is concerned with a subtotal related to the x-ray department. The chief technician is concerned with individual studies. The dark-room attendant is only interested in pieces of film.

COMPUTER CONCLUSION: Primitive Computer Systems merely duplicate the pre-existing manual system. Their real power lies in the next step, which is to reorganize the reporting system. That is, they cause a reorganization of the hierarchy.

TRANSMISSION

The prediction is made that management system will be forced in the direction of a hierarchy of three: Those who are able to make decisions, those who cannot make decisions but are necessary for some task, and the computer. One function often seen in non-computer systems is simply to pass the information unchanged up to the line. There is little doubt this activity will vanish.

Example:

Robert McNamara (from Princeton via Ford Motors) was a computer expert who became Secretary of Defense under John Kennedy. By installing computers, McNamara was able to jump the Army reporting system (Sergeant to Captain to Secretary of Defense) and confront the generals with discoveries before the generals had received the news. We are told that the generals didn’t like it a bit. But can anyone doubt that Robert McNamara carefully filtered the data before h presented it to President Kennedy? The system of hierarchical reporting condenses the data to the next step up.

COMPUTER CONCLUSION: Many systems of management by delegation will soon be swept away by the computer revolution, and middle management will be the most threatened region. It will resist but it will lose.

MODIFICATION

Another function of delegated systems is to take raw information and reduce it to condensed form for the benefit of the next level upward. They do so by a process which is often a mystery to the next higher level, and hence a certain power is conferred on the lower subunit to modify the conclusion by modifying the system of manipulation. The method for controlling such activity is to produce a procedure manual which the next higher level must approve, but the inherent complexity which forced a delegated process to be created also obscures the power of the delegated subunit to modify the system.

COMPUTER CONCLUSION: Computer technology strictly defines and inflexibly follows defined procedures for steps in hierarchy. It thereby confers much stricter control power to the higher levels of hierarchy.

THE NEED TO KNOW

If for no better reason than to reduce programming costs, the computer process confers a new power to the lower levels of hierarchy. The higher level must now strictly define its reasons for asking for certain information. If it cannot demonstrate a need to know, it cannot justify the cost of knowing.

Example:

The PSRO, acting on behalf of the physician community, violently resists the inclusion of data elements in the reported tape sent to the Bureau of Quality Assurance. At the same time, it is anxious to acquire as much data as possible from units lower in the hierarchy, who in turn resist the process. It can be expected that this process will eventually settle out at roughly the best equilibrium for the community at large, although differing aggressiveness among the participants may cause temporary inequities. The weapons in the battle, which are at the disposal of the physicians are:

(1) Superior Claims on the decision-making process.

(2) The faith of the public in physicians as the most trustworthy custodians of their health privacy.

(3) A superior pool of talent, determination, and independent means committed to a vital issue.

COMPUTER CONCLUSION: If you have a good chance of being the winner in the reorganization of a hierarchy, it is better to participate to your utmost rather than hold back out of fear that someone else will be the winner, because only participants are winner.

NETWORK

We have spoken thus far of hierarchy as the only manageable approach to the complexity of open systems. A more general description would be “modularity” since modules can interact in a lateral direction as well as vertically. When they do, the result is a network of modules in three dimensions. Since computers increase the ability to cope with complexity, they increase the ability to work in three dimensions. Hierarchy is the last resort of manual management; just as three-dimensional chess is beyond the ability of people who are not even very expert at two-dimensional chess. In this sense, the computer revolution provides some hope for the American System, which presents hierarchy and naturally prefers networks when feasible. This is to some extent a philosophical preference and does not seem to be true of the Japanese social system, or the German mentality, or the Communist method. The natural American instinct for lateral equality is thus an ally in Medicine’s conflict with Government, but a hindrance when it encourages Nurse independence or unrealistic consumerism.

Whether lateral or vertical, the interaction of modules in a complex open system is the same: delegation of a method, the output from one module as the sole input to other modules, and resistance to the need to know.

COMPUTER CONCLUSION: The organization of modules into vertical hierarchies or horizontal networks is largely a political process, with three-dimensional networks as the last resort of compromise, and with strict vertical hierarchies as the last resort of inadequacy.

CONFIDENTIALITY

Complexity is itself a major defense of confidentiality; since computers reduce complexity, they also destroy the smoke screen. Computer System which stumbles ahead or is manipulated into breaches of confidentiality is certain to raise a great uproar about the need to know and the right to conceal. In the PSRO system, the issues balance between the duty of accountability and the patient’s right to privacy. When reduced to these terms the physician community has a clear advantage in the mind of the public, if the advantage can be effectively exploited. The latter can, however, be overturned by speedy pre-emption of the turf. it can be predicted that special pleaders will insist on accountability when all they really want is power and satisfaction of envy; it can fairly be predicted that some will weaken their claim to privacy by overextending its bounds.

Example: The system of peer review on Medicaid prescriptions in Pennsylvania has turned up a number of instances of patients who obtained multiple prescriptions for “controlled” drugs from multiple doctors, filled at multiple drug stores, probably for resale on the streets. When the doctors and pharmacists were notified, they were universally grateful and took steps to curtail the problem. However, the computer vendor learned of the problem (regardless of the fact that all reports are shredded after review) and persuaded the state government to institute a system of restricting problem patients to a single physician. It may now be impossible to dislodge this meat-ax reaction, in spite of the fact that the computer peer-review system is probably able to cope with the problem without invoking hierarchical power.

A Second Example: The United States Navy recently developed a system of computer protection so elaborate that they boasted of it in the newspapers. Two computer scientists read of it, and in a month’s, the time had broken into the system via telephone. The Navy was then agitated to read of its disarmament in other newspaper articles.

COMPUTER CONCLUSION: There is no present foreseeable technical method of protecting the confidentiality of computerized data, except by physical ownership and physical protection of the machine itself and all of its activity.

CONCLUSIONS

The most significant event in the Twentieth Century is the Computer Revolution, just as the Industrial Revolution was the major event of the Nineteenth Century. By the greatest good luck for medicine, the computer revolution is capable of solving the four major problems which now threaten the American Medical System.

1. THE FAILURE OF THE PRE-PAYMENT INSURANCE MECHANISM. The removal of cost restraints on the patient (and thus the provider) has had a predictable upward effect on costs. The overwhelmed system has reacted in a typical hierarchical manner: try to convert insurance companies into regulatory bodies, and if that fails, into rationing systems. The computer revolution (if we are agile) has the potential of drastically reducing the information costs which are now 40% of hospital and insurance company costs. It also has the ability to control utilization abuses, and expose power abuse to public decision.

2. THE VAST INCREASE IN PARAMEDICAL PERSONNEL. Middle management is most vulnerable to computer replacement, and middle management now costs 20% of the hospital dollar. Physicians in complex medical centers are most alarmed about this problem, which they can easily identify by comparing the hospital parking problem with what it was, twenty years ago. Surgeons are typically least concerned since their role at the center of procedures is least threatened by aspirants. But surgeons are hearing of “unnecessary” surgery, and even the small-town solo practitioner has to hire girls to fill out forms. The complexity of our system must be reduced, and computers can do it. The best way to thwart the claims of aspirants to power is to eliminate jobs.

3. THE EXPLOSION OF SCIENTIFIC INFORMATION. No one would wish to reduce the output of the research community, but ways must be found to organize and transmit the information without resort to fragmentation by sub-sub specialists. The computer is ideally suited to the problem. THE MALPRACTICE CRISIS. Physicians are uncomfortable with the idea that peer review may soon become entangled in the malpractice system, as indeed it inevitably will. The matter comes down to biting the bullet, armed with a statistic. Surely consent for an arteriogram is more threatening if it is couched as “you might lose your leg” than if you are told, “you have one chance in five thousand” of such an occurrence. Realistic insurance premiums can be set when the risks are defined. Juries can be provided with realistic statistics on normal risks and normal expectation of benefits.

Through all of these four problems runs a common theme: The cost of medical care. The PSRO seems to be the last best hope of curtailing the cost threat to medicine, and so the PSRO can be expected to be the vehicle for the computer revolution’s resolution of the issue. Senator Bennett probably had no idea of what he was doing, but he did it, and the problem is now our problem.

Health Insurance National, and Otherwise

Health Insurance National, and Otherwise

George Ross Fisher, M.D.

A Message to Big Business

Recently the National Chamber of Commerce studied the question of cost containment in the health field and urged local chambers to organize data reporting systems for employee health and hospital costs. It is not clear what employers could do with such information once they had it since their employees (or unions) are likely to be resentful of intrusion into personal privacy. If the data should by chance demonstrate that one doctor, hospital or HMO was cheaper than another, the more expensive providers of care would surely claim that quality was related to cost. In any event, the American tradition is for the patient, not his employer, to select his doctor.

A far more productive data analysis for employers would be one which helped him select the best insurance company, or the best health insurance benefit package, for the employee group. While it is true that unions have exerted considerable influence on benefits packages or even carrier selection, the unions and the employers unite in a desire to get the most benefits for the least health insurance cost. It, therefore, seems likely that more action would result from examination of the financial data than the medical data, although in both cases it is necessary to be a diligent pupil before the data is intelligible. We here propose that it is worth-while to understand the ratio of hospital costs to hospital charges. Having understood the matter, the Chamber is urged to apply it to local hospitals and individual employee groups.

The examination of internal hospital subsidies is greatly assisted by the existence of an unwieldy document, the SSA-2552. The Medicare agency requires every hospital to complete a 25-page annual financial summary, complete with folded-over pages and filled with numbers. This document is prepared for a public purpose, and under the Freedom of Information Act, is available to all who wish to examine it. For the purpose at hand, it is possible to ignore all of this document except for column 2 on page 18. On page 18 is found “Worksheet C.” Departmental Cost Distribution. In column 1 will be found; the total costs generated by each department during the year (A.), together with the total charges generated by that department (B.) In column 2, the place where present attention is focused, each department displays the ratio of A divided by B, the ratio of Cost to Charges. A quick glance will identify that the ratio is usually less than 1.0, in keeping with the practice of charging more than your costs in order to make a “profit”. A glance down the line will quickly show even a casual reader that there is a very considerable variation in the ratios from one department to another and that there are definitely department with a ratio greater than 1.0, which means that these departments are being subsidized.

The Medicare cost report, available from every hospital, displays the ratio of costs of charges for each revenue-production department of the hospital. The concept of the ratio is simple enough. In a free enterprise system, everyone is accustomed to the idea that the price of things is always a little higher than the cost. The difference is called a profit margin, or mark-up. We are even familiar with the occasional situation where the selling price (charge) is less than the cost; that is called a loss-leader.

Therefore, loss-leaders excluded, we would except the normal ratio of costs to charges to be approximate.90, allowing about a 10% profit for bad debts, charity, etc.

Furthermore, we would expect the individual department of the hospital to display a cost-to-charge ratio which is relatively uniform, and fairly close to overall total for the hospital.

Notice that the important issue is not how close the ratio is to unity (1.0) but rather how close it is to the overall hospital total ratio. That is, how uniform the ratios are between departments.

A great many people assume that, if the cost-charge ratio is less than 1.0 and a profit is therefore generated, any insurance company which pays charges must have higher premiums than an insurance company which pays “costs”. Such an inference is not necessarily correct as a theory and is quite clearly incorrect in certain circumstances. The premium reflects all of the expenses of the insurance company, not just the hospital payments. Subsidy of non-group individual subscribers by group subscribers is a major example of the equalizers affecting health insurance premiums.

The following figures for cost-to-charge ratios were taken from an actual hospital’s Medicare cost report. They fairly represent the national pattern, although there is a great deal of individual variation between hospitals. The important things to notice are the non-uniformity of departments, and the separation of hospital departments into two distinct classes:

Table 1. Ratio of Costs to Hospital Charges by Department

Undercharged (Ratio) Overcharged (Ratio)

Operating Room 1.02 X-Ray .74

Short Procedure 1.20 Isotopes .68

Labor & Delivery 1.32 Laboratory .69

Anesthesia 1.19 Oxygen .59

Physical Therapy 1.38 EKG .22

Daily Room Charge 1.22 EEG .54

Intensive Care 1.25 Medical Supplies .46

Drugs .58

Finally, one dare not assume that the cost-to-charge ratio for a department is reflected in every service performed by that department. The ratio comes about by the cost accountant assigning indirect costs to those departments which have the best cost reimbursement experience. At the same time, charges are raised on those items most likely to be paid for in cash, within the perceived limits of the ability to pay. Charges tend to be closely examined on common items like blood counts and chest x-rays, while uncommon test and services tend to be too much trouble to examine frequently in close detail. Therefore, there are often bargains in rarely-used services whose charges have not been raised in some time. Finally, there are items which can be charged off as bad debts if unpaid by a Medicare patient. Under this heading are personal items like television sets, or uncollected 20% coinsurance on ambulatory services; for setting h charges on these items, maximum brazenness is rewarded.

How to Play the Game

The free-market, or Adam Smith, philosophy is presumably highly regarded by the Chamber of Commerce. The theory supposes that every rational person will press his own interest and advantage to the point where he comes into equilibrium with the rest of the community, who are acting on their own separate behalf. It must be clear that the hospital financial and reimbursement system strongly endorses the “every man for himself” philosophy. What follows are a few suggestions for overachievers in the business world who would like to play the hospital game with a little more success than they have demonstrated in the past. Perhaps if they do, the community at large will benefit as a new equilibrium is set.

Notice that a cost/charge ratio greater than unity (1.0) means a loss leader. If your insurance company pays charges, it is paying less than another company which is paying costs. Never mind that the “costs” are inflated with doubtful indirect costs; that’s what the cost-reimbursing insurance company pays.

Notice that the benefits package of a charge-reimbursing insurance company should heavily include the use of those hospital departments which are loss-leaders. Those departments which are highly profitable for the hospital, however, should be avoided, since the presence of insurance just raises the prices still more. Since these services are mainly out-patient (ambulatory) services, tell your employees to go for them to their doctor’s offices. If you must cover them with insurance, specify that the insurance is not valid for use in a hospital. (Don’t worry about anti-trust: plenty of policies are only good in a hospital out-patient department.) If you feel you must cover them, put them in the major medical policy.

Notice that the cost-reimbursing insurance companies have an exactly opposite set of motivations. They need to include a large number of ambulatory benefits since they get a bargain on such services. However, if they are restrained from this endeavor, they will be forced to resist the cost escalation of inpatient-intensive services, which means they resist the current escalation of indirect costs. Since the root cause of hospital inflation is the rampant growth of unrestrained indirect costs, it is possible that restricting Blue Cross to inpatient reimbursement would stop the spiral. It is in the competitive interest of a charge reimbursing carrier to avoid extending out-patient benefits. Blue Cross, by contrast, would have to be forcibly restrained.

If an employer intends to be serious about playing the hospital game, he needs to know what kind of services his own employees are using. He also needs to know what the particular cost/charge quirks are at the local hospitals where most of his employees find themselves from time to time. It is easy to imagine one employer with 30% of his employees' women under the age of thirty, while another employer mostly might have nothing but middle-aged male employees. A new business will have young active employees, an older business may have pensioners to consider. The climate makes a difference, and occupational hazards must be considered. So, what’s good for one employer isn’t necessarily good for others, or necessarily good after the business grows for ten years. And the hospital cost accountant, by the way, isn’t going to be asleep as things change over time.

It would require a rather sophisticated data system for an employer group (or even an insurance company) to analyze its experience in terms of hospital departmental usage. So, a simpler conceptual approach is suggested. The departments with a high cost/charge ratio tend to be used by surgeons and surgical specialties. Conversely, the non-surgical physicians' internists, pediatricians, psychiatrists, family practitioners) tend to use most heavily the hospital departments which have low cost/ charge ratio. There is no conspiracy at work; it just happens to work out that way as a result of independent stresses which have been discussed elsewhere.

So, it would appear that subsidizing is taking place by the patients of non-surgeons for the benefits of patients who have surgery. Somewhat true, although the situation is more complicated.

Both Blue Cross and the commercial carriers employ an analytic system for large employee groups, known as experience-rating on the basis of charges incurred, (even though the plan pays costs, not charges). The commercial carriers experience-rate on the basis of charges, too, but they actually pay the charges. So, an experience-rated group gains nothing by switching carriers so long as the experience-rating continues to be based on hospital charges. The premium they pay will reflect a subsidy of surgical patients by non-surgical ones.

But there is another class of patients for whom the reverse is true. The non-group individual subscribers to Blue Cross have a diversion of premium money toward surgery, while the whole non-group program is receiving a subsidy from the group subscribers. It is difficult to tell whether the continued effect is positive or negative for surgical patients. But the non-surgical, non-group subscribers are certainly getting a bargain. Until someone figures out a way to force subscribers to belong to a group, a company should think twice about forming one. Decreased benefit package? Buy an excess major medical policy and forget it.

Of all the subsidies which characterize this giant medical financial equilibrium, the greatest is on the basis of the age of the subscriber. It scarcely needs proof to recognize that young subscribers do not have the same health costs as older ones, but they do pay the same premium. All health insurance plans would do well to devise a system of vesting before competition exploits this inherent weakness and topples the structure. A movement by groups into non-group would eventually reach an equilibrium, but a selective movement of young subscribers to competitors or self-insurance would start a spiral which could be very drastic, indeed.

Finally, there is one other recourse which subscribers could take to the situation wherein non-surgical hospital patients subsidize surgical ones, while experience-rating prevents them from doing much about it. The recourse would be to seek care outside of a hospital. Nowadays there is not much difference between a first-class nursing home and a hospital, except that you can’t do much surgery there. Next time you hear someone talking about “excess hospital beds”, take a hard look at who is talking.

PRO DATA AND THE QUALITY OF MEDICAL CARE

PRO DATA AND THE QUALITY OF MEDICAL CARE

Address to the Symposium on Computer Applications in Medical Care Washington DC, November 5, 1984

George Ross Fisher, M.D.

Almost everyone in this audience knows the PROs replaced the PSROs less than a month ago. If not, absolutely everyone does know that a prospective-pricing DRG system for paying hospitals replaced the old cost-plus system, up to twelve months ago. Prospective payments of hospitals, therefore, appear to be older than the physician review mechanism which provides oversight, but nothing could be more misleading than this time sequence. The payment system and its oversight system were created by the enactment of separate statutes. It is not possible to understand where the Medicare program stands without knowing that the PRO law was drawn up before the DRG (Diagnosis-related Group) law was passed, and reflects a context of uncertainty whether the DRG would be passed.

In a moment, I will return to the important consequence of this anomaly for the PRO data system. However, first, it seems useful to offer a brief historical review of hospital reimbursement by Medicare. In 1965 the driving force behind the creation of Medicare had been to improve access to care by removing the financial barriers to access. The Blue Cross system of cost reimbursement was ideally suited for that goal, since it allowed hospitals to spend whatever they thought they needed to spend, with a year-end retrospective audit and settle-up. The recklessness of this approach was quickly appreciated as hospital costs to the Medicare program rapidly climbed above expectations. By 1972 the matter was of such concern that Congress created the Professional Standards Review Organizations (PSRO) to identify and restrain what was felt to be the main cause of the cost escalation, namely unnecessary or excessive use of the hospital by doctors. From the doctors’ viewpoint, that did have an uncomfortably reasonable sound to it. We were reminded, and we agreed, that only doctors admit patients, only doctors write orders, and only doctors send patients home. After ten years more, however, it was evident that hospital costs had continued to soar in spite of the PSROs. Whether the PSROs had done a good job or not, was immaterial; it was clear that what they had done was not enough. PSROs protested that the blank-check reimbursement system made utilization review of the volume of hospital services quite futile. If doctors should cut the number of blood counts in half, all that was likely to result was that the price of blood counts would double.

By 1982, there were two main options for the government. Either make the PSROs program a whole lot tougher or else change the reimbursement incentives. As it turned out, the government adopted both options. The DRG prospective payment system was enacted; and a set of incredibly bloody-minded policies were prepared for the PRO, including quotas for overall cost savings, quotas for reduced admissions, and a mind-boggling intensification of the surveillance of hospital records. As one government official has written, “The medical record has now become the hospital bill.” It is not possible for an outsider to know how much, or by whom, these regulations and policies were changed during the long period they were held up by internal wranglers within the administration. What is clear is that when they did emerge, the first few months of the prospective payment system had already demonstrated that such an attitude was 180 degrees away from what was really needed. Under the old system of reimbursement, the PSROs urged the hospitals to reduce unnecessary services, whereupon the hospitals protested they meant to preserve the quality of care. Under prospective payments, however, it is the hospital which is cutting costs, and the PRO is the one which needs to protect the public from consequent deterioration in quality. This role-reversal has been very sudden since the impact of DRGs on length of stay has been far greater than generally anticipated. Many hospitals are already reducing staff in order to down-shift to an era of lower occupancy.

This Gilbert-and-Sullivan comedy came to a head and one hopes, came to an end on August 2, 1984 at a Senate Finance Committee hearing when Senator Durenberger (the chairman of the Health Subcommittee) confronted the top administration of HCFA and proclaimed for the public record in no uncertain words that the intent of Congress was that the purpose of the PRO was not to save money. Not to save money. The DRG prospective pricing system was what was to save the money; the PRO was to safeguard the quality of care from the inevitable pressures of reducing expenditures.

There is, therefore, the reason to hope we will soon see major shifts in emphasis in the PRO program, one hopes even including total renegotiation of all the contracts. However, the data system will not be so easy to change, and if that is not changed the people in OMB may yet win the battle. Any program which deals with the analysis of data becomes dominated by the data it receives far more than it is dominated by the intention of its leadership. Present policy mandates the PRO receive its data from the fiscal intermediary, who derives it from the hospital’s reimbursement request. While there may be minor cost savings in such a third-hand data system, it is totally inadequate for the purpose of assessing the quality of care. We have several intermediaries in Pennsylvania and one of them has yet to give us a scrap of data for months Pennsylvania has been on prospective payments. The other intermediaries have indeed given us data, but I would not always describe their performance as speedy. The reason for the delay is not always the fault of the intermediary. In reviewing cost outliers, we have encountered at least one 300-bed hospital which declares it is totally unable to produce an itemized bill. The other hospital seems to produce bills, but the inaccuracy of what we have checked is very ominous.

Now, assume that threats, penalties, and fulminations can coerce the data to be accurate and timely. I would not count on it, but it might happen after a year; the previous speaker, dr. Ertel can tell you better than I can. But the content of the data found on the reimbursement invoice is completely barren of information useful for assessing the quality of care, as indeed it should be if a parsimonious design has limited the data elements to those necessary for the single purpose of issuing and auditing reimbursement. As for the chances of enhancing the data set for additional purposes, the system of passing the data through the intermediary creates a permanent adversary system. Naturally, intermediaries can be expected to rebel at incurring key-entry and data processing costs for purposes which are irrelevant to the reimbursement function, for which they are paid, and on which they are judged. The intermediary can scarcely be expected to become an enthusiastic agent in imposing new data collection requirements on hospitals, while hospitals will predictably resist proposals that they supply data to prove they have been skimping on their services. If past experience is any guide, every proposed addition to the data set will be denounced as costly, unnecessary and unconstitutional, and these denunciations will emanate from the parties who are expected to report it accurately and quickly.

It seems clear to me that HCFA urgently needs to convene some planning task forces. It needs to create a permanent public negotiating arena for the various data combatants; for this, the Prospective Payment Commission would be a good model to copy. HCFA needs to commission some public-domain software. It also needs to stimulate a very large number of demonstrations projects, because the PROs are embarked on a totally new venture, with no existing models to copy.

If you please, I would like to make a proposal right here. We have heard a great deal about provoking or preventing unnecessary deaths, as an index of the quality of medical care. Everyone eventually dies, however, so it is more precise to say: medical intervention shortens or prolongs the interval between the intervention and the subsequent date of death. In a statistical sense, we improve on or fall short of, the individual’s adjusted life expectancy. The advent of disease adjusts the life expectancy, while the therapy or therapist modifies the adjustments. Over on Security Boulevard in Baltimore, a vast computer empire regularly keeps track of the date of death of every Medicare recipient. The data is supplied by undertakers who not file a death certificate without centrally reporting the social security number; the purpose is to stop sending out those green checks as soon as possible after death.

What that system means to me is that HCFA already has in existence two data systems which, if linked together, would permit calculation of actual subsequent life spans of every Medicare patient, or specified groups of Medicare patients, regardless who treated them, how, or for what. It boggles my mind to consider the potential for assessing the average impact on adjusted life expectancy by one hospital or one therapy. And in the aggregate, if the overall “effects on adjusted life expectancy” should begin to deviate from historical values, there would be cause to investigate whether changes in the financial environment of medical care had been the underlying cause.

Let me close by describing our situation as an exercise in macro-economics. Economics have wondered whether 11.5% of the Gross National Products is too much to spend on health. Others say we can and should afford even more than that. Let me tell you how every government always answers such questions of resource allocation. The method is simple. You cut 11.5% down to 10.5%, and watch to see if anything bad happens. If not, you cut it some more. Eventually, when something bad does happen, you restore a little money and declare the issue is closed. If you agree with me that the DRG is just such a methodology, then you do not say the role of the PRO is to preserve the quality of care. Rather, you say the role of the PRO is to detect the first signs of inevitable deterioration in quality at the very earliest possible moment. If our data system is poor, it will take longer to detect problems, and it will be harder to convince people you have detected them. With a poor data system, the budget cuts will go deeper than they ought to go, and care will get worse than it has to get. And that will be a shame.

Piggybacking Claims and Crossing them over.

There are reliable estimates that about 65 cents per health insurance claim could be saved by receiving the information in electronic form rather than on paper. While the physician community may not yet be ready to submit its claims over the telephone, there are several other sources of claims over the telephone, there are several other sources of claims where there would be no technical obstacles at all to the elimination of paper claims. The first is the transfer of the unpaid balance from a primary coverage to major medical coverage ("piggybacking"). The second is the transfer of unpaid claims balances from the primary coverage to a secondary carrier ("electronic crossover").

There seem to be three reasons this obvious efficiency has not been much implemented. The first is the fact that a number of just claims are not currently submitted because of confusion by patients and their families. The second is that speedier claim payment would reduce the interest income for the insurance carrier on the premium pool, or "float". The third reason is that resulting efficiency would decrease employment in the data processing department, a consequence which is resisted by data processing managers and which top management feels insecure in demanding.

To a degree, this situation is encouraged by employers. Increased payment of benefits to the patient would increase the premium up to what it ought to be; that would benefit employees but not their employer. Elimination of the interest float would benefit physicians, raise premiums for employers. And top management in all business shares a feeling of sympathy with insurance management when it, too, demonstrates it cannot cope with the vestal virgins in the data processing division.

It seems very likely this problem would move quickly toward a spontaneous solution if a little public attention were drawn to it. The problem might profitably be discussed with members of the press, with union officials, with consumer representatives, and with state insurance commissioner, all of whom could be expected to be unsympathetic to further stalling. The introduction of a bill in the legislature would be a way of attracting the attention of the public.

Going Down with All Flags Flying

They tell me every man is a little afraid of his father-in-law. I was certainly afraid of mine. He was a giant of a man, and no one called him gentle. As a college student at little Hamilton College, he was named to Walter Camp's All-American football team, subsequent to a famous game at West Point. In those days, wearing a helmet was the mark of a sissy, and kicking the opponent in the groin was nothing much. In off-season, he went out for track and field and held the American record for the forty-pound hammer throw for a number of years afterward. Believe me, he was plenty big. As an intern at the old Roosevelt Hospital in New York, he used to volunteer to ride the ambulance into Hell's Kitchen, mostly for the fun of being able to mix into the bathroom fights.

Now, the really intimidating part of his character as far as a nerdy son-in-law was concerned, was intellectual. His roommate at Hamilton had been Alexander Woollcott, the man who came to dinner. My mother-in-law despised Alexander, as apparently, every hostess did. But my father-in-law enjoyed him thoroughly and would invite him to give a lecture at the local Torch Club in Binghamton as a way of showing the local disbelievers just who really knew whom. My in-laws lived in a small city in upstate New York which seemed to me to have invented the concept of provincialism, but I kept my opinion private. My father-in-law felt no need to conceal his opinions, and that too put me in awe. He didn't go around calling his neighbors a bunch of narrow-minded blockheads, but it was definitely true that his favorite expression was, "Well, that comment of yours is ridiculous, of course." As a man who could hold his own at the Algonquin Round Table as well as against the Army offensive line, he said just about anything he pleased.

I truly believe he was an outstanding physician, although I never saw him in action as a physician. He belonged to some of those snotty surgical societies which would be unlikely to admit a man from a small town unless he had more than distinguished himself. Societies like that do have a certain number of dolts in their membership, but such dolts are almost invariably from Harvard or Johns Hopkins or some similar place where being a sycophant to the society president back at home can occasionally get you admitted as a favor to the great man. That sort of thing is unlikely to get someone admitted from a small town unless he is an individual of unusual distinction. Even beyond such honors, I talked medicine with him quite a bit, and I am left with the feeling that he knew what he was talking about. As we say in the medical locker rooms, he was my kind of doctor.

But one day his time was up. He called us to say goodbye, just before he underwent emergency surgery from which he held scant hope of recovery. His surgeon was much more encouraging to us on the telephone, but when we arrived, he told us of the conversation he had conducted with his patient. As nearly as I can recall what he said, it went like this:

" Dr. Blakely, I think you have appendicitis, and we must operate immediately." "Nonsense. I have mesenteric thrombosis and I Know it."

"No, said the surgeon, "I believe you have appendicitis. It's quite typical."

"Will it do any good to operate on me if I have mesenteric thrombosis?"

"No," replied the surgeon. "But I believe you have appendicitis and operation will save your life."

"Now listen here," said my father-in-law, "My own father died of mesenteric thrombosis in 1922. Since that time, I have read everything that was ever written on the subject. Have you?"

"Well, no, I haven't, but I have seen a lot of cases of appendicitis, and I think you ought to be operated on immediately."

The old man looked him hard in the eye and waited a minute. And then quietly said, "Very well."

As anyone can guess from the way I tell the story, he had a mesenteric thrombosis in his belly when the surgeon opened him up. And he was dead before my wife, his new grandson and I arrived to be at the bedside.

Blue Shield and Blue Cross – What's at stake? III – The city and its bedrooms

Clinton Health Plan: Promises Broken?

Clinton Health Plan: Promises Broken?

GEORGE ROSS FISHER

AEJ March 1994, Vol. 22, No. 1

There is growing recognition the Clinton health plan bears little resemblance to the Clinton health speeches. I intend to respond to the program chairman’s instruction to discuss the Clinton plan, as leaked in a 250- pages documents to Democratic leaders. But, I must state this: just as the leaked Clinton plan bears no resemblance to the Clinton speeches, it is also likely the Clinton plan is only a tool, not a blueprint, for the Clinton strategy. The written Clinton plan reads like a deal-making machine. It is filled with quid pro quo, with veiled threats for non-cooperation, and with hints of possible rewards for interest groups who fall in line. Many proposals are made, but in politics, it is, of course, not necessary to push all of them with equal vigor, or any vigor at all.

Distorting the National Incentive System

A number of large corporations have been unsuccessful competitors in recent years, chief among them is the auto industry. Unless failing firms reduce surplus capacity, corporate raiders will reduce it for them. The chief response has been to offer early retirement to older workers.

Because health insurance in America has an unfortunate linkage to employment, it has been common to promise to pay the health insurance premiums for early retirees until they reach Medicare age. The promise is, of course, a blank check, and fair accounting of it nearly wiped out the net worth of many large but essentially failing businesses.

The Clinton proposal would lift this burden from the back of the industrial failures to keep them alive a little longer. The rest of the population will pay for this in one way or another, depending on how the other deals are made. Of one thing you can be sure: every man, women, and child are not going to smoke 16 packs of cigarettes daily to pay for it with tobacco taxes. And, if you suppose $234 billions of waste, fraud, and inefficiency can be wrung out of Medicare, you can have it on the word of the world’s chief Medicare hater, me, such an idea is either fanciful or demagoguery, depending on your political party.

Now, the news of the early retiree swindle was leaked to the press by a Democrat spokesman, so we can hope the real Clinton strategy is to broadcast the promise but try to make it look as though Republicans in the Senate were the ones who killed it. If it should unluckily pass, there will be highly undesirable consequences. Chief among them, of course, is the incentive of rewarding failing businesses by taxing successful ones. Successful growing businesses, to underline the point, are not retiring people early, they are trying to hire extra employees.

Intergenerational Equity

The second incredible consequence of the early retiree deal is to cripple the stated goal of the program, which was to ensure the uninsured. You would think the program would lower insurance premiums for people who are typically uninsured; unfortunately, the proposal is to balloon such premium by 500 percent.

To understand the issue, you need to know two things. First, most people without health insurance are young. Second, health insurance for young people is cheap, unless tinkered with. The Clintons tinker, all right, using something called “community rating.” Community rating is charging everybody the same premium, in spite of knowing the true cost for a person age 25 is only 20 percent of the true cost of someone aged 55.

Where in the world did this idea of community rating come from? Let me tell you. First and foremost, it reduces the cost to the government of picking up the early retirees. It is beyond my resources to calculate the relative cost of the two items overall (young uninsured versus middle-aged retirees from mismanaged businesses); but, it looks likely mismanagement costs the country more, even in the short run.

You might as well know some more. Until recently, the dominant form of health insurance was Blue Cross, and Blue Cross always used community rating. I suspect they were responding to union negotiations which tend to offset health insurance fringe benefits against hourly wages in the “pay packet”. It does not matter; Blue Cross dominated the scene with community premiums. Eventually their competitors, notably the HMO’s learned how to enroll younger subscribers selectively and take the resulting profit for themselves. First, the Blues were left with sicker older subscribers and got in so much financial trouble their premiums had to skyrocket, causing them to spinal again into still more loss of business. And second, states like New York, Massachusetts, and Vermont got themselves into trouble by passing a mandatory community rating law, which was nicknamed in the legislative corridors the Blue Cross Rescue Law”.

Under this new law, the New York insurance department set the premium for a 30-year-old at $7800 per year for a family plan. Keep that figure in mind when you learn the Clinton plan proposes a national premium of $4200. I guarantee any state government with a disparity like that is willing to suspend disbelief if their dream is to redistribute costs to other states, particularly to young people in some other state. Young people better look out for their interests.

Yuppies do seem to be waking up. It is a universal truism among Yuppies to expect to be cheated by Social Security when they get to the right age. So, it should be a fairly easy belief, however attractive the Clinton health plan may be for their parents, that it too will all go up in smoke for baby boomers when the time comes. Mr. Clinton minimizes the cost and asks Yuppies to think ahead. It will be most unfortunate for his plan politically if they do.

What young people need is a credible guarantee. It would be even nicer if their guarantee could be put away at compound interest and actually reduce the lifetime cost. Time prevents a digression to the Health IRA proposal, which would do just that. What is central to an economic discussion to Health IR proposal, which would do just that. What is central to an economic discussion is the principle of necessary private ownership of policies. What is true of Social Security is also true of the health scheme the federal government simply cannot invest money. Senator Moynihan of New York once blew the whistle on the way purchasing U.S. government bonds for Social Security Trust Funds merely underwrites the federal deficit. The U.S. government can scarcely be expected to buy bonds of foreign governments. And, if it bought a trillion dollars' worth of common stock, we would quickly have the Communist ideal of government owning the means of production.

Government is inherently incapable of being an investor on behalf of its citizens. Although the government puts a spin on it, we are necessarily facing another “pay as you go” plan in the Clinton health proposal. Even “pay as you go” might be tolerable if it were based on present value accounting, net of inflation. Such accounting is improbable since the Clintons are already forced to pay for present health care in one scheme by postulating future reductions ($200 billion from Medicare) in another.

Let us return from investment digression. Young people are to believe community rating is designed to spread the risk of the unfortunate sick. It is not. Like “pay as you go”, it is intended to make young people subsidize the payoff of major corporations for making management blunders, and politicians who court their support.

The nature of required support is becoming clearer. For the past six months, the medical community has watched a remarkable onslaught of demands from insurance companies for them to participate in the price and utilization control system known as “managed care”. The insurance companies are careful to explain they are only responding to intense pressure from employers. The force of that was brought home to me when I recently addressed the Chamber of Commerce of Philadelphia. In a day-long symposium on health care, the representative of the hospital and I were excluded from the room while the chairman of the meeting lectured the corporate benefits managers for two hours. Who started this rumpus, which is obviously timed to coincide with the Clinton health speeches?

Well, obviously, I do not know. But, Joseph Califano would certainly be on my short list of suspects, because the auto and steel industries have been so outspoken for so long. And, they needed a trusted insider in the Clinton campaign. Potentially, however, there is grim pleasure in imagining how angry steel and auto moguls will be when nasty gridlocked Congress deletes the early retirement deal in a House-Senate conference committee closed session.

Individual Rather than Company Ownership of the Policy

For quaint historical reasons, those conference committees on health will be made up of the leadership of the Senate Finance Committee and the House Ways on Means Committee, the supreme court of national taxation. Now, Sherlock Holmes noticed it was particularly a dog did not bark, and the Clinton proposal has one big omission, too. He does not touch the $48 billion annual tax entitlement of wages paid in the form of health insurance premiums. Even without the revenue loss, this is the heart of the artificial crisis which President Clinton proposes to solve.

As you know, it got started when Henry Kaiser offered fringe benefits as a way around wartime wage controls, and the War Production Board felt income taxation would expose them as disguised wages. Regardless of history, the tax-exempt feature of employer-paid health insurance premiums is the main, or possibly sole, reason employer-basing is the main form of American health coverage. Consequently, along with getting divorced by a working spouse, it is the main reason losing your job means losing your health insurance.

For years, the Census Bureau found roughly 37 million people lacking health insurance every time they conducted a spot check. It took a while before they asked the longitudinal question of how long the individual had been without coverage. It took a while before they asked the longitudinal question of how long the individual had been without coverage. It turns out 28 million of the 37 million can be accounted for as partial persons, constituted out of a pool of 68 million who lack insurance for an average of four months during a two-year period. Leaving aside the quibble that treatment for most medical conditions can be deferred four months, it emerges our problem is not what we thought it was. More or less, permanent lack of coverage is found in 9 million people, most of whom could probably be fit into Medicaid. The rest, having a far more pervasive if a less severe problem, could be cured of their difficulty if the employer turned over the ownership of the health policy to the individual employee, never mind who paid for it.

What is the slogan to be derived from this? Must break the link between health insurance and employment. In my opinion, we do not need to rearrange health care to do it. Just declare as of the signing of this Act, health insurance belongs to and can move with the person it covers. Never mind who writes the premium check.

Cost Shifting

Speaking of national tax policy, the contentious 1993 budget bill, passed by only one vote, purported to contain $250 billion in expenditure cuts; $50 billion, or 20 percent of that, was to come from reducing Medicare, and $42 billion was from reductions in hospital expenditures. Well, guess what. Hospitals will immediately react to those federal revenue losses by raising prices to the other clients in the hospital, mostly paid for by employer group health insurance. In this way, a $50 billion cut in expenditures is instantly transformed into a $ 50 billion tax on business.

Now, the Clinton health plan proposes to pay for several hundred billion in new programs by a new $238 billion cut in Medicare and Medicaid. To the extent this is not just “fantasy” in Senator Moynihan’s phrase, it will effectively be a new round of taxes on business. More likely, the Medicare squeeze-process has already been pushed past the point where the Medicare program can survive if it is seriously extended. Since the collapse of Medicare is more than any political party could survive, the absolutely certain outcome is a larger deficit, or more taxes, or both.

And even if that does not work, am I being extreme in saying it will endanger the health of the nation?

Bringing Welfare recipients into the Workforce

There is one legitimate social argument for risking massive disruptions of a good medical system. Every welfare program has the same difficulty that the person who leaves welfare may then be worse off financially, even though he takes some low-paying job. In our system, Medicaid medical coverage is an important asset for the welfare recipient, particularly pregnancy coverage for young women. A young person's taking marginal jobs may gain a sense of pride, but marginal jobs seldom give out health insurance. It thus appears attractive “to break the chains of welfare” by giving subsidized health insurance to young persons in low-paying jobs.

People who use this argument usually refuse to accept identical logic with regard to repealing the minimum wage laws so their sincerity may be open to challenge. However, the main problem created for health care reform is equalizing the discrepancy which forces the benefits package of the new insurance to match that of Medicaid, unless the choice is to make Medicaid coverage worse. Generous benefits packages delight doctors, of course, but using a politically correct benefit package for Medicaid makes the whole Clinton scheme too expensive for governors and legislatures even consider.

By this circuitous route, we get to the idea of merging Medicaid with the mainstream of health insurance. Once merged, legislatures do not have to pay for fixing the Medicaid mess, a business will. Business leaders may now imagine they have an inexpensive bargain since they already pay taxes which go toward Medicaid costs. A small price to pay for getting rid of the early retiree burden, no doubt.

Business leaders are so utterly wrong about the future size of this welfare cost, it is not acceptable to let them stew in their own juices. The country cannot afford to let them ruin their companies that way.

Rather than digress into political solutions at this convention of economists, it seems better to propose the legitimate social and economic goal of reducing the barrier for welfare-leavers only. Or some extra benefits for welfare leavers could center o pregnancy coverage, the main medical issue which would affect employment choices (as drug abuse and AIDS, aimed at hopeless cases, probably would not).

Risk Pooling, Reinsurance, and Alliances

The problem of uninsurability for medical reasons positively cries out for some form of risk pooling. Medium-sized business probably would be well served by reinsurance, while small business groups and individuals might be better served by assigned risk pools or joint underwriting. Although these approaches are thoroughly understood and tested within the insurance industry, the Clintons heard about them from Alain Enthoven but propose something quite different.

The contrivance is called an alliance; it is really a forced merger of insurance companies, with a political board of directors and an enormous bureaucracy. Since the solutions to the uninsurability issue are so straight-forward and time-tested, one has to suspect the true main purpose of the alliance is to supervise price controls.

There is a saying among manipulators that the way to hide something is to put it in the next-to-last paragraph, which careless people often do not read. At approximately that point in the Clinton, Health Proposal is a description of the transition plan-how the country is to get from here to there. It centers on the risk pooling idea, acknowledging to Alain Enthoven it has been considered. Perhaps a way can be devised to get into the transitional stage and never go any further. The first Tuesday in November 1994 seems like an appropriate time to start a mid-course correction.

Redefining the Concept of a Hospital

The Clinton plan proposes to transform hospitals from revenue centers to cost centers of “alliances,” using the Kaiser model, we presume. Unfortunately, the rest of the country does not have the luxury of choosing where to place hospitals which fit into the Kaiser system of doing business, avoiding other areas less adaptable to that system. Many hospitals are run by churches, many are the solitary facility in a region. Anyway, the long-term trends seem to lead in other directions.

Hospital care is moving from the center of cities to the suburbs, where it is cheaper to be but where the service mode is different. Patients with educated families and bathrooms on the ground floor can go home early, often the day after surgery; social isolates in walk-up flats need a bed in the hospital for a week. Meanwhile, continuing care retirement centers in more centripetal areas are rapidly coming to provide post-operative care “at home” in their infirmaries. These all seem desirable evolutions but it is uncertain where they will lead. Five-hundred-thousand senior citizens now live in a retirement village with infirmaries, but how far that trend will go, and what part of the urban landscape they will occupy in unclear. If you believe in market solutions, you will let this sort itself out. If you believe in central planning, you will have those consumer committees in health care alliances decide it for the country.

Copayment and Supplemental Insurance

Finally, I come to a technical blunder in the Clinton plan which could easily slip past. Almost everyone agrees partial payment by the patient is desirable, and the Rand Corporation showed evidence it could reduce overall health costs about 30 percent. The Clinton plan provides for a 20 percent patient copayment for all services.

However, patient copayment comes in a variety of forms. I want to leave you with the opinion that all copayment is a good thing, except the 20 percent coinsurance variety, which is a bad thing, or at least a delusion.

Visualize an individual’s annual health cost as a rectangle. You can shave off a part for the patient to pay from any of the four sides. At the front, you have what is known as a deductible-and it is a good thing because it reduces the administrative cost of petty claims. At the back, is balance-billing, which serves as a safety valve for luxury demands and helps adjust imbalances between premium collection and inflation or technology advances. Balance billing is a second good way to involve the patient in his costs.

But, shaving 20 percent off the longitudinal side is a dumb idea. It doubles the administrative expense. It is only a great favorite of insurance marketing departments because it reduces the premium exactly 20 percent, whereas it requires an actuary to tell how much the other types of copayment are worth.

However, there is that darned supplemental insurance, the “65-special” or whatnot. It can be purchased for, guess what, 20 percent of the cost of the main policy, and you are, thus, back to total insurance without any patient copayment at all. You also then have two insurance policies instead of one, with any patient copayment at all. You also then have two insurance policies instead of one, with double overhead and double confusion. I can understand how people on a fixed income wish to budget their medical costs. I hate to forbid anything by law which does not hurt someone else. And yet, it is quite clear the purchase of supplemental insurance to cover cash obligations will utterly defeat the cost-consciousness of patient and provider.

So, as this health care debate goes on and on, remember something. Do not outlaw supplement insurance; outlaw 20 percent coinsurance provisions in the main policy. But, do it without damaging front-end deductibles, or back-end balance billing.

Doses of Medicine: A Physician Prescribes Changes for the Health Industry

Doses of Medicine: A Physician Prescribes Changes for the Health Industry

George Ross Fisher, M.D.

In science, is civilization’s future. -Francis Bacon

CHAPTER 1: How Did We Get in This Mess?

The medical profession is pretty bewildered; facts have somehow stopped speaking for themselves. It now actually seems urgent to defend Medicine’s traditional arrangement against hostile challenges. No increase in life expectancy, no conquest of yet another disease, no miracle drug seems to constitute a self-evident defense. We must answer for sins; Even the wry old joke about What have you done for us, lately, is easily answered. We give, for a quick example, vastly improved cataract surgery to nearly a third. Yet all that does not seem to matter to people; the health system is asserted to be in “big trouble”.

My morning newspaper, for example, tells in a single day of the bankruptcy of two local medical school hospitals, while Moody’s rating service reduces the credit rating of my own hospital, the first and oldest in the country. Medical care almost seems to be entering what chess players call the endgame. We have too many hospitals and medical schools, weed them out. We have too many doctors and other medical personnel; overvalued services must be downsized, in contemporary parlance. Even technology advances are blameworthy. New medical technology is produced endlessly, demand for it consequently unlimited, continuing to grow until it impoverishes the nation if not the world. Belief in social justice will be destroyed by denying new technology to the poor. But the nation’s economy will be destroyed by providing it to everyone.

There is some painful truth to these complaints, but they go too far, unleashing avalanches which are not easily stopped. Changes to the medical system taking fifteen years to evolve might possibly be a good thing; three years convulsions are surely only harmful. Take for example the pursuit of social justice in providing the best medical care for everyone, rich or poor. If the country can’t afford it, what then? Surely, social justice is not achieved by denying, in the name of even-handedness, treatment to the majority who can still afford it. Women and Children First is a noble thought, but Nobody in the Lifeboat at all is just intolerable.

All of these are the confused shouts of a quarrel over “healthcare reform,” or more accurately, healthcare financing reform. Most ordinary Americans sense that something has gone very wrong and it didn’t require the scare tactics of “Harry and Louise” to bring them this awareness. They want to preserve all that is good about medical care. They want to find a rational and equitable way of paying for it. Unfortunately, they don’t find most proposed fixes acceptable, while our leaders cannot openly express the possibility that there just might not be enough money to do everything equitably, within a competitive global economy. The present prosperity of the country actually makes the dilemma seem worse. There does not even exist much likelihood that future gains in an already exuberant economy could pay for constantly improving the medical care of highest quality, denied to no one. In the main sections of this book, it will be my contention that the only force which can resolve these dilemmas is medical science itself. The way to reduce the cost of medical care is to eliminate disease.

Formative Years.

For those who feel more comfortable leading rebellions than defending against them, it must be consoling that today’s conservative medical establishment is a product of two centuries of revolution so radical and continuous that famous colonial notables could not possibly survive in practice today. Indeed, neither could those who graduated just twenty years ago, except for continuous study and retaining. Significant changes usually have insignificant beginnings. In that spirit, someone dug up the possibly apocryphal story of the daily diaries of King George the Third of England, where the entry for an important day for King would have been, July 4, 1776. His Majesty’s alleged comment:

“Nothing much happened, today.”

Well, that was wrong, and much of what later happened was caused more by the King’s invincible oblivion, than by a mere 30 days lag in transatlantic communication. We cannot trust the continuation of present trends, but at least we can see that lesson of history. What happened to medical care in the future may well depend on whether the reading thinking public wakes up and takes a stance, after first troubling to learn something about the matter. Begin, with a quick history.

Twenty-five years before that fateful day in the colony. Benjamin Franklin and Dr. Thomas Bond in 1751 had founded the Pennsylvania Hospital. In the style of the English voluntary hospital, it was founded primarily for the sick poor and perhaps, if there was room, for those who could pay. Since for decades it was the only hospital in America, it established a purely charitable tradition which lasted more than a century. Poor people went to the hospital. Persons of means were visited by their physicians at home, had their illness, babies and operations, and eventually expected to die, at home.

Franklin had hoped taxation would eventually pay for the care of the indigent, but the Legislature soon taught him (and us) not to count on it. The receipts from paying patients were also minimal. For nearly two subsequent centuries, the charity hospital was primarily financed by gifts and bequests and managed to get by.

Around 1870, two major changes occurred in the character of hospitals. Joseph Lister, an English Quaker surgeon recognized Miss Nightingale’s militarily disciplined hospital, fanatically clean and airy, as an ideal place to practice aseptic surgery. And incidentally, of course, to have paying patients transported to the surgeon and the equipment, rather than the other way around.

At about the same time, the Canadian physician William Osler came to the Philadelphia General Hospital, where he developed a medical education system which was to revolutionize the non-surgical part of hospitals as much as Lister had revolutionized the surgical wings. Osler was largely unappreciated in Philadelphia and soon went on to John Hopkins in Baltimore to perfect a system of medical education through barter. The student nurses, medical students, and interns worked free of charge (and very hard, by the way) in return for education, the patients permitted themselves to be used as an example for teaching in return for free care. (you can still get free haircuts at barber schools), and the community physicians gave free teaching in return for concentrated experience and prestige, highly useful in attracting paying patients.

Although the Osler and Lister systems persisted for little more than a century, the synergies of the arrangement transformed the typical American hospital from an almshouse into the local center of medical care. In many parts of Europe, that system was not followed, so ten-bed clinics owned and operated by a single prominent physician were often the prestige professional centers. In America, it is true, country doctors would often start small private hospitals, but the Osler/Lister model created a strong imperative to merge them or close them. Is somewhat lower prestige somehow implied that the small hospital, unless striving for a transition to a medical school teaching hospital model, might be inherent of lower quality? This was a circular argument, one which certainly raised costs long after costs became a central issue. At any rate, it is difficult to name any other profession where the trade school is also the epicenter of practice.

The Great Depression following the 1929 stock market crash suddenly exposed the fact that this hospital-based system was more expensive than community-dispersed medical care, possibly unsustainably more expensive. Dr. Osler’s system of organized free service in return for training had until then largely concealed the steady march of increased expense caused by Lord Lister’s summoning the populace into the surgical temple. The hospital added hotel costs on top of medical costs, and for paying patients there needed to be more amenities. Whenever you cluster six employees together, you need a seventh to supervise them; seven supervisors need a super-supervisor, and so ad infinitum. A supervisor needs an office, maybe a secretary. Pension benefits need a specialist. The expanded mission for hospitals was probably more expensive, but uncertain just what size was the optimum for a hospital, they mostly just got bigger. After the first World War, however, and for the first time in a century the financial options began to be reexamined.

The stresses of the great economic Depression forced all hospitals to recognize that their dependence on financial benevolence would bring them to extinction. The solution they devised was health insurance. Around 1935 the hospitals organized Blue Cross, a non-profit system for community sharing of cost and spreading risk. An insurance company needs reserves to protect against unexpectedly high claims. The hospitals provided such necessary guarantees behind the insurance by agreeing to reduce their prices if necessary to preserve Blue Cross solvency. In 1940 state medical society doctors used the same strategy in founding Blue Shield, similarly putting themselves at risk in lieu of the needed cash reserves. Blue Shield never could quite overcome the disproportionately heavy administrative costs of paying smaller claims for non-surgical physician care, since the insurance mechanism costs money and the costs of processing a small claim are about the same as for a big one. Non-surgeons sulked over this relative exclusion because any bill is easier to collect f insurance makes it appear free at the time of service. You (and fellow insureds) have paid in advance by paying the insurance premium.

Going back a few decades a social cancer had been growing in the medical community, the Technological Entitlement. Best summarized by example, this sense of entitlement grows in the mind of a specialist when he sees a general practitioner performing services he wishes he might do himself, or in the mind of a teaching hospital administrator when he sees a rural hospital keeping cases rather than sending them to Big City. As long as specialists or the specialty hospitals depend on voluntary referrals from the generalists, they must be civil about their sense of entitlement, but professional fraternity inevitably suffers when there is a surplus of specialists. On the other hand, a shortage of generalists leads to referring patients unnecessarily to specialists just to lighten the workload. The issue would resurface in a few decades when “managed care” reversed the financial incentives. Within this specialist/generalist tension lay a whole host of unrecognized problems for the future. The best and most economical situation for the public is to have just the right balance of generalists and specialists. There is a long lead time before you restore balance once you recognize an anomaly because the commitment to a specialty is made at the beginning of a forty-year practice. And smashing through the whole tense situation is a loose cannon. Manpower is in the hands of the medical schools, and the medical schools are competing for patients. Tuition receipts once were their main source of income, but now the majority of medical school income is derived from the practice receipts of the faculty. The conflict of interest is extreme.

These professional bickerings are now intensifying at the end of the 20th Century. They have shoved aside during desperate days of the depression, rendered meaningless during the five-year physician shortage caused by the Second World War. But after America won the War, everything changed. The nation in post-war exuberance felt it could afford some seemingly bold steps. But problems are often caused by solutions. The nation unwittingly committed itself to a financial premise which apparently can now only be altered by a disaster. The Second World War totally changed the financing of medical care.

America Medical Care After the Second World War

In 1940 only 10% of the working American population carried health insurance. By 1950, 50% did, and the explanation is simple. Wartime industries hampered by wage controls had employee recruitment difficulties and were therefore allowed (by the War Production Board) to offer free health insurance benefits without calling the wages. Not only were wage ceilings broken, but the added “fringe benefits” escaped income taxes, probably to maintain the fiction they were not extra wages in disguise. Henry Kaiser was a pioneer in this system; needing people to build “Liberty” ships he launched what would evolve, ultimately, into the HMO or Health Maintenance Organization. By 1950, so many people enjoyed the tax exemption of employer-based health insurance that the Internal Revenue Service tried to get it repealed. In the end, Congress lacked the political courage to do so, knowing very well how people hate to lose something they have come to expect. The post-war economy boomed. Loss of revenue from the tax exemption, although huge, was seemingly bearable. When threats to repeal the tax preference gradually subsided, the matter was forgotten. By 1998 most people are quite unaware of the two main truths of American health insurance: a) It isn’t really insurance, it’s prepayment and b) It’s a rather inequitable tax dodge, which you can fully enjoy only if, and while you are paid a salary by an employer.

Helms, Robert B., The Tax Treatment of Health Insurance: Early History and Evidence in A Fresh Approach to Health care Reform, Galen Institute, Washington DC, March 25, 1996,

This system raised medical prices, perhaps intentionally. After the Second World War, there just didn’t seem to be enough medical capacity to serve the country. Fifteen years of neglect had left almost every American hospital with a run-down physical plant. The population had grown, the backlog of untreated conditions seemed unlimited. The country meanwhile enjoyed a world monopoly of undestroyed industrial plant. The Richest Country in History enjoyed prosperity. Nurses an intern were starting to get paid; why not when most people had insurance to pay for it? Medical advances, stimulated by government-funded research, began to produce unimaginable benefits. Hospital construction was stimulated by the Hill-Burton Act. Medical schools were not only urged but almost threatened and bribed, to expand medical student enrollment. And so, in this climate Lyndon Johnson succeeded in getting part of universal national health insurance enacted in 1965, by restricting coverage to the elderly (Medicare) and the indigent (Medicaid). The AMA protested the costs were underestimated; liberal proponents scoffed and announced fully universal coverage would come soon because it was “inevitable”. Little noticed at the time, reimbursement to hospitals was made open-ended under the new system, completely reimbursed after the money had been spent. Money for hospital construction was particularly generous, and with sensible accounting, a hospital could be repaid $1.04 for every dollar it spent on construction. Little did the country care.

The country nowadays cares a lot about medical costs, because for so long it cared not a whit. And so, we are now busy bankrupting hospitals, threatening holders of hospital municipal bonds with potential default, and getting ready to go back to operating on kitchen tables. But before we get to that, notice that in 1973 Congress passed an equally colossal bill, a pension bill called ERISA (Employee Retirement Income Act). Nobody in Congress appreciated it at the time; hardly anyone in the public knows, even twenty-five years later, what a fundamental upheaval in medical care had been set in motion by few afterthought clauses in this act. President Gerald Ford, at the time he signed it, could well have written an entry in his diary similar to what George III of England supposedly wrote on the Fourth of July. Nevertheless, today Blue Cross is on the brink of being ruined because of ERISA. Many more people today have health coverage under ERISA provisions than have Medicare. Effective control of a large part of the trillion-dollar medical industry is effectively in the hands of the executives of self-insured big businesses. Control is perhaps too strong a word. The CEO’s make it clear that while they prefer their self-insurance for employee health to be good, they definitely don’t want to hear about it. And, oh, by the way, see to it that Congress doesn’t touch it. It is harder to characterize the United Auto Workers contract with the automaker as a single event in history with a notable birthdate, but it does stand as some sort of high-water mark of the money-no-object era of medical care, which stretched from 1945 to perhaps 1975. Since the UAW contract is still in force and extends for the rest of every auto worker’s life, however, it is not just a quaint relic of a gilded age. it created a $15 billion contingent liability for General Motors alone, and surely will cause immense pressure to apply to Republicans in Congress by management, corresponding to equally strong pressure on Democrats by the union. What was agreed in a binding contract? That the auto companies would pay full medical benefits, a fee for service and without gatekeepers, for the rest of an employee’s life. As long as Medicare reduced the company’s cost for retirees, that was fine. But no matter how much or how little Medicare would soften the burden, the company had to make up the difference. Consequently, if Congress or the President thinks Medicare benefits should be reduced, any savings to the government would then simply translate into costs for General Motors, so think again. This serious quandary tends to make management and stockholders of auto companies view national health insurance proposals in an unexpectedly favorable light, while conversely it sometimes makes auto workers unexpectedly cool to be “single payer system”. Single payer is very definitely still being promoted n liberal circles, nominally as an innovative way to provide coverage to the uninsured. Although a 1998 decision by the U.S. Supreme Court somewhat let General Motors off the hook on its lifetime contracts, we will surely hear more of this. Somewhere around 1975 (The Vietnam conflict had its effect), the country lost faith that all the health system needed was somewhat more money. The new concern was that the health system is a bottomless pit which will bankrupt us all. Carefully considered, the real panic should have been based on a recognition that health insurance itself had pushed up health costs to a point where no one could afford to be without health insurance. Society’s dilemma appeared insoluble, so everyone looked about for individual ways to survive. Someone was going to get hurt, look out for yourself. The emotional counter-revolution about costs soon generated the various enabling acts for HMO’s (Health Maintenance Organizations), which passed the state legislatures around 1980. The HMO was scarcely a new idea; many had been around for decades. A blender and less effective national law had been passed seven years earlier. The driving features of the model act promoted by the National Association of Insurance Commissioners was a bias in favor of investor-owned companies, particularly those with no physicians running them. It is worth nothing that those who framed the HMO legislation incorporated into it the first explicit statutory exception to the long-standing prohibitions against corporations practicing medicine. Up until that moment, all states had a ban on corporate practice. The HMO acts specified that HMO corporations might practice, just in case anyone wanted to obstruct them on that level. In fact, the law created an enormous hidden incentive for doctors to combine into corporations. Furthermore, since the 1975 Supreme Court’s Goldfarb decision, groups of independent physicians are expensively investigated under antitrust for doing things they could freely do if they worked for a corporation. Meanwhile, the managers of any corporations have only one duty to their stockholder owners; make as much money as possible. Managers have ample power and considerable experience imposing this imperative on anyone they employ, doctors or not. Meanwhile, the courts are interpreting ERISA as prohibiting an injured patient from suing the HMO, even for the corporate policy as the source of injury.

We can now see the imperative to control medical costs, mainly driven upward by widespread insurance eliminating price resistance, is curiously linked with a contradictory mandate: expand insurance coverage even further. A notable piece of legislation was enacted in 1983, demonstrating the national carelessness about this contradiction. In response to widespread criticism, by me among others, Congress abolished the 1965 system of unlimited cost-reimbursement for hospitals and substituted payment by diagnosis, the DRG (diagnosis-related groups) system. Hastily crafted, the 1983 budget reconciliation bill included an overpayment to teaching hospitals based on the number of resident physicians they had in training (“the indirect medical educational allowance”). It also created a bonus for hospitals who have a “disproportionate share” of indigent patients (please remember the irony of how hospitals started). And, finally, it phased in the new payment system in different quadrants of the country in stages, basing payments on the ongoing experience, but with resulting regional differences.

While the DRG system worked better than its crude construction suggested was likely, the indirect educational allowance created a multimillion-dollar incentive for hospitals to hire unneeded residents, whether domestic or foreign-trained, thereby both expanding a physician specialist glut and resulting in a differential overpayment to the teaching hospital. The disproportionate share payments intentionally skewed payments toward urban hospitals but also created a perverse incentive to maintain medical ghettos for indigents, just the reverse of bringing poor people into the mainstream as Lyndon Johnson had hoped to do. And the rolling phase-in of the 1983 law, for its part allowed some regions of the country to set costs at an artificially high level during the on-going year, effectively setting an inflated standard that suggested they could be overpaid forever. Efforts to create rebasing, or to reform the disproportionate share or the indirect teaching bonuses, have led to a rather dismaying 14-year stonewalling in Congress, reflecting resistance from the winners in this lottery. Worse still, it presented Congress with the political difficulty that all rectifications, if nationally uniform, would only exacerbate the competitive disadvantages of hospitals which had been unintentionally neglected in 1983.

In 1993 the Clinton health Plan net with disaster. While it masqueraded as a way to extend health coverage to the uninsured, it was primarily a cost containment plan. It had largely been developed by the Jackson Hole Group, consisting of the major health insurers, meeting in the vacation home of Paul Ellwood. Following the defeat of the national legislation, this interest group put enormous resources behind a campaign to force the health system to adopt “managed care” universally. Part of the reason for haste was the recognition that a strong argument mighty emerges that employee health benefit money really belonged to the employee. It was doubtful that employees would agree to managed care once unions and the public generally woke up to the fact that employers really had almost no right, apart from their responsibility as agents acting on behalf of employees, to insist on particular insurance choices. Or physicians, specialist, drug, and hospital choices.

In response to this astounding shift in the nature of health insurance in just two or three years, the really serious and possibly irrevocable reaction began. Hospitals responded with consolidations into chains and mega-corporations. Traditional hospital incorporation as not for profit was typically circumvented by consolidating the business aspects into a for-profit subsidiary, and then selling it (mostly stripped of its cash reserves). Seven thousand hospitals may consequently soon be only five hundred. There is even talk of consolidation into thirty national chains. One large chain is noted for its unique method: buy five hospitals in a town, close three of them, make everybody pay your price to use the remaining two. The non-profit shells of former voluntary hospitals still wonder about, uncertain of their control. Things are moving too swiftly for the convoluted antitrust statutes to catch up; that’s another incentive for haste. The Supreme Court, through a century of decisions, had established complex definitions of what constitutes anti-trust violations by a business. But it little imagined that such definitions and sanctions might later be mindlessly applied to either learned professions or charity hospitals.

However, in 1975, that’s what happened. Irritated by the behavior of some fellow lawyers in Virginia, the lawyers on the Court handed down a decision which removed all lawyers’ traditional anti-trust immunity. Unfortunately, lesser courts defer to every word of a Supreme Court decision, and by speaking of ‘learning professions” rather than just lawyers, the Burger Court’s Goldfarb Decision suddenly astounded physicians, as well, into an industrial model that largely bears little resemblance to the practice of medicine. While it may be true for other forms of business, the medical profession has never acknowledged that money, efficiency, and prices (economic standards) are more important than the health of their patients (non-economic standards, excluded from antitrust consideration). Case law had earlier evolved in the courts defining concepts like “vertical integration”, which had manufacturer, wholesaler, and retailers in mind. Such rulings now present bewildering obstacles to rationalizing insurance companies which own hospitals, or hospitals which employ physicians. By applying ancient “per se” doctrines to an amazing medical profession, the Court even blocked the medical anti-trust neophytes from explaining their unique facts under the “rule of reason”. The hodge-podge of the Goldfarb Decision with Burger terminology embellishment was soon made worse by a particularly egregious lapse of common sense, called the Maricopa Decision. In that case, the Court made a chilling example of a county medical society, found guilty of the newly invented crime of placing maximums on their own fees. Since doctors were thereafter not allowed to publish a schedule of either maximum fees, they had to stand by and watch the insurance company chosen by the employer divert their patients into the offices of competitive physicians who were perfectly free to fix prices, by being employed or part of a group practice. The patients may not have been happy about this, but the too found little choice. What the Supreme Court didn’t notice in the Maricopa decision was that for practical purposes prices were no longer set by physicians in a physician-based marketplace. Rathe, physician prices are really set by insurance companies in an insurance-based marketplace. If price fixing has any modern significance in healthcare costs, it is a collective significance, not an individual one. To tangle one group of market participants in per se price-fixing arguments while a competitive group runs loose with collective pricing is scarcely equal justice, and is obviously destabilizing the market.

In the 1997 arguments about State Oil v. Kahn the Justices challenged the Solicitor General to name a single instance in which someone had been prosecuted for maximum price fixing unless the maximum price was just a minimum price in disguise. The Solicitor General couldn’t think of any, but the Maricopa case was the perfect example if it had been permitted to have a hearing.

In 1998 it is fair to say the country is fed up with intractable healthcare contradictions Physicians consequently tell themselves that Managed Care stands convicted in the court of public options and will surely be mostly abandoned. But just a minute. The desperate hospitals have meanwhile turned the healthcare system on its ear, scrambling eggs that not be easy to unscramble.

In the next two sections of this book are my best efforts to suggest some ways to get out of this mess. In the section of Part, I which immediately follows I will propose some incremental and I hop achievable reform proposals for health insurance, with the goal of improving general access to healthcare. In Part II of the book are suggested ways to reduce the cost of care which are far less radical than chain-saw massacres presently in prospect, but consequently more likely to endure. This book would then still not be complete without a final assessment of the present blood-soaked battlefield, the villains, and the heroes. After two hundred pages of constructive suggestions, I do ultimately feel entitled to say my say about the destructive ones proposed by others. Read on but keep pondering the original questions. In the name of medical evenhandedness, if we cannot have everything we want, must nobody have anything at all?

`

Determining the Sex of The Human Fetus in Utero

Chapter One.

Determining the Sex of The Human Fetus in Utero

Stuart B. Blakely, M.D.

Binghamton, N.Y.

(Reprinted from

The American Journal of Obstetrics and Gynecology,

St. Louis, Vol. 34, No. 2, Page 322, August, 1937)

The diagnosis of fetal sex had intrigued interest and baffled solution for centuries before the twentieth-century invention of ultrasound, which of course greatly simplified the matter. In fact, the new technology was so cheap and simple, it essentially eliminated the question without the fanfare usually associated with such a revolution. Among peoples of all ages and areas, efforts had been made in vain to bridge the tantalizingly narrow gap between the observer and the child in its mother's womb. Classifications of means and methods employed in fetal sex diagnosis and discussions of them in each group, immediately transformed from a catalog of "superstitions" into more mundane investigations--the original purpose of this paper-- only a few decades ago. A straightforward review, however sharply revised for more contemporary viewpoints, shows how calmly astounding insights may sometimes be accepted even though they had been universal mysteries for generations.

While the logic of primitive thought is often vulnerable, it is not inferior to much that is current today. Regarding the diagnosis of fetal sex, one might fancy that it proceeded somewhat as follows, although not, necessarily, as a line of conscious reasoning. Marked changes from normal are evident in pregnant women. These changes must be due to the action or influence of the growing products of her conception. These changes vary in different women and in the same women in different pregnancies. Some of these variations must be due to some difference in the fetus. The only confidently obvious difference between a fetus and newborn is sex which must also exist before birth. This difference, I.e. sex, is almost surely the cause of at least some of these variations. The male is profoundly different from the female and has been considered to be of greater value, strength, and importance. The effect of a male fetus on the mother must likely be different in kind as well as degree, although not necessarily in timing. Therefore, the signs and symptoms of a male pregnancy probably do differ in character and degree from those a female pregnancy, but probably less than once was conjectured.

All means that have ever been used to diagnose fetal sex may be placed in two great classes: supernatural and natural.

The means employed in THE FIRST CLASS were the prophetic interpretation of numerology (still existing as late as the sixteenth century in countries as far apart as China and Italy), astrology and dreams; of the examination of the entrails of sacrificed animals and of the flight of birds; of "ordeals"; of chance happenings and occasions; and of magic formulas and other procedures. Material on this phase of the subject can be found in the first volume of Ploss-Bartels. It is interesting that the use of strictly supernatural means to determine fetal sex was never persistent or extensive, compared with the second class. I have not met nor heard of a survivor. Legendre records a French folk belief in a curious mixture of lunar influence and numerology.

The SECOND CLASS, comprising the natural means to diagnose fetal sex, from time out of mind to very present, may be further divided into three broad groups. Group 1. The supposed origin of the male from the right side of the uterus, the female from the left; and the changes in the right side of the pregnant woman's body ascribed to or imagined to result from, such origin.

Group 2. The position, outlines, attitude and activities of the fetus during pregnancy and labor.

Group 3. The effect of a male fetus on the total maternal organism; i.e. the reactions of the female body to the introduction of a male element. This is the largest and most important group.

Group 1.

A notion of antiquity was that the human uterus consisted of right and left cavities, as is normal in many animals which were the chief source of the ancients' ideas of anatomy. Since the right side has always been considered the stronger, superior and "holier" side and the male the stronger, superior and more valuable sex even in its mother womb, it followed that the male must develop in the right side of the uterus, the female in the left. Hippocrates taught that "The Male fetus is usually seated in the right, the female in the left side of the uterus. " After it became known that the human uterus is not normally duplex, the idea became current that the male came from the right ovary, the female from the left. This must have been, however, a comparatively recent development, for knowledge of the part played by the ovary and him ova in reproduction is not old. Through historic time this idea is found scattered from China to Europe; right-handed signs and symptoms point to male pregnancy. There is more pain or heaviness or more or earlier movement in, or more prominence of, the women's right side, if pregnant with a male. The right breast is larger, "softer" and more sparkling with a wider pupil. All blood vessels on the right side of the body are fuller and beat more forcibly (the sublingual being especially mentioned), and the right pulse is stronger. The right shoulder is lower, and the right thigh thicker. The woman starts off first with her right foot and supports herself more with the right hand. Salt does not melt on the right nipple, and the right nostril tends to bleed. Many, if not all, of such ideas, may be found in the "e Secretis Mulierum", a book ascribed to Albertus Magnus (1193-1280), which was widely used in the scholastic time of medieval medicine.

While right-sided signs and symptoms are no longer valued in fetal sex diagnosis, a bit of the old belief still lingers in the theory of the ovarian or ovular determination of sex. The idea that sex is determined by the egg still lives and will not die, and among men of scientific training. As a matter of fact, the last word on the subject has not been spoken. Otto Schoener published his theory in 1909 and his results in 1924 and 1925. It has given rise to a large volume of German literature. Schoener held, and still holds, that the right and left ovaries alternate continuously in their activities (an idea suggested by Bischoff in 1844); that the human ovum possesses its sex "Anlage" before fertilization; and that the sex "Anlage " changes, --possibly better said, appears--, in each ovary in the following sequence: right ovary, male; left ovary, female; right ovary, female; left ovary, male. The cycle is repeated ad infinitum. E. Rumley Dawson proposed the hypothesis that male and female determining ova are discharged from the ovaries alternately, male from the right and female from left. Both these men claim that, after the first pregnancy, it is possible to quite accurately foretell the sex of future children by a careful history of the menses (actual and missed), assisted by the palpation of an enlarged tender ovary due to the presence of the corpus luteum of pregnancy. The difficulties of these theories are quite apparent; e.g., menstruation is not always associated with ovulation nor vice versa, and the sex of children after unilateral oophorectomy does not always conform to the rules. Through many years of observing pregnant women, I have never been able to determine any right-sided signs or symptoms peculiar to male pregnancy, nor evidence of either definitely alternating ovarian activity or of ovular determination of sex. It is probably safe to deny their existence, though dogmatic statements about the physiology of sex are dangerous.

Group 2.

The position, outlines, attitude and activities of the fetus during pregnancy and labor.

Hippocrates held that the boy moves in the womb at three months, the girl at four. This idea, with variations in the actual number of the months, was once widespread. It was also thought that labor was slower with a female child. These conceits are entirely consistent with a belief in male superiority. The girl was supposed to be born "face-up," looking at the rib whence she came, a bit of Genesis perhaps, or reminiscent of the usual position at coitus.

In this group belong two modern "natural" means that have been employed in an effort to solve the problem: the x-ray (two procedures) and the rate of the fetal heart. Roentgenologists agree that the ossification of the skeleton of the female is more advanced than that of the male throughout intrauterine life; it has been suggested that this fact might be utilized to foretell fetal sex. Visualization of the fetus in utero (including the outlines of the soft parts), by rendering the amniotic fluid opaque through the injection of strontium iodide into the amniotic sac, occasionally permits the diagnosis of fetal sex, if a true lateral view of the breach is obtained (menses).

In 1859, on the basis of a study of one hundred cases, Frankenhauser suggested that fetal sex might be determined by the rate of the fetal heart in the last three months of pregnancy, a persistently slow rate (averaging 124 or less a minute) indicating a boy, and a persistently more rapid rate averaging 144 or more a minute) -- a girl. A large number of observations have been made with corresponding literature. If the male fetal heart is slower, it must be due to some peculiar influence of male sex itself, maleness per se, for which I know of no evidence; or because the male is heavier or bulkier, but the average difference in the birth weights of the sexes would seem to be too slight to have much effect; or the result of some hormonal action, as yet unknown. It is generally conceded today that the method is of no, or at least of very little value, if for no other reason than that the usual fetal heart rate falls between the figures given and so into the uncertain class. Many of the laity express a wistful faith in it. Some physicians for unworthy or obscure reasons, encourage this faith by professing, at least not denying the same. Nevertheless, it may lay claim to having been a really intelligent effort to solve the problem.

Group 3

The effects of the male fetus on the total maternal organism cells and organs, their functions and secretions.

In pregnancy, mother and child are a biologic unit. If the mother's own hormones produce well-recognized phenomena, why may not be added fetal hormones (which she surely receives) alter these phenomena in degree or character? If the male fetus introduces into her economy new or "foreign" hormones, why may these not alter her response; and, if harmful (as we know they may be), why may they not meet hormonal or humoral resistance (be protective?)? The maternal response to pregnancy may be physical, or biochemical (using the term in a broad sense), or both. Her reactions may be quantitative, qualitative or both. A discussion of these two possible types of reaction now follows.

Aristotle held that, since the female is on a lower developmental plane, a female pregnancy has less effect and makes less demand on the maternal organism than does a male pregnancy; that there is greater body warmth in a male pregnancy and therefore a better circulation; and that on these as a basis the diagnosis of fetal sex is possible. some observers today agree with Aristotle that a male pregnancy makes greater demands on the pregnant woman. There is claimed to be more iron in the male placenta; more adrenalin in male urine, and therefore (?) more in the urine of a woman pregnant with a male child. It is said that midwives in the Philippines used to prophesy the sex of the unborn child by the reaction of the pupil of a male dog's eye into which had been dropped some of the pregnant women's urine. Thinking along this line, I observed the pupillary reaction of twenty-five pregnant women on whom the Bercovitz test of pregnancy was done, to see if the contraction or dilatation of the pupil bore any relationship to the sex of the fetus. The results were negative.

The second idea, that the reaction of the pregnant woman to a male fetus is qualitatively different from that of a female fetus, is very old, runs as a common thread through most of the ancient methods of sex diagnosis, and is the basis of nearly all modern efforts to solve the problem. Hormones can and do pass the barrier of the placenta. Profound changes are produced in the pregnant woman's organ growth, circulation, skin, glands, etc.; she is often "rejuvenated". The origin must be in the fetus, a source of additional, possibly new and different, possibly even antagonistic hormones. If the fetus dies, these changes retrogress. There is no question but that a male hormone (using the singular for convenience) exists. There is some question when and in what quantity this hormone is first produced in the fetus. There is a still larger question if the male sex hormone, by circulating in the maternal bloodstream, induces or can induce recognizable specific changes in the mother's body, by acting as an antigen with the production of "antibodies" or by some hormonal effect. Every cell of the male fetus must differ from the female cells of the mother. The mother has no organ homologous with the fetal testis or the fetal tissues that produce male sex hormone. There is probably no antagonism between sex hormones as such, i.e., they do not neutralize each other when mixed together. But there does appear to be some sort of antagonism, direct or indirect, between the specific hormone of one sex and the specific hormone-producing organs or tissues of the opposite sex. Moore and Price reject Steinbach's and other's ideas of sex hormone antagonism; they admit that certain facts do point to such action but claim that the effect is indirect through the hypophysis. But compare the production of sterility by the parenteral injection of semen or even its vaginal absorption the production of agglutinins against spermatozoa, and the occurrence of freemartins and other phenomena to be discussed in the immediately following paragraphs. Does the introduction of maleness, e.g. a male fetus, into the female body produce quantitative or qualitative changes that can, possibly one might add, someday in the future, be recognized by the clinician or the laboratory worker? Is there any evidence that a male pregnancy has an effect on the mother, different in degree or character from that of a female pregnancy? In the attempt to answer these questions, let us examine further evidence which is closely bound up with the inescapable idea of some sort of sex antagonism.

Ancient relief. This must be neither, lightly regarded nor summarily ignored. The remarkable agreements of such beliefs among people widely separated in time, place and culture arrest attention. Somewhere in the welter, to be found someday by some seeing eye, maybe a little, or the little grain of golden truth. Not everything that we cannot prove scientifically is improbable.

The frequency of male abortions. The ratio of male to female abortions is at least 150 to 100. The cause must be in the "fruit". This may be the reason for nature's prodigality with male pregnancies because so many are destroyed by some unfavorable reactions to their presence in the maternal organism. Some women seem to abort all male conceptions, carrying only female to term; the reverse, at least in my personal experience, is rare. Male stillbirths are also more common, even after discounting the usual causes for this condition and the hazards of male birth itself. Cases of unexplained and of "habitual" death of fetus near or over term are 80 percent males. The excess of males among abortions and stillbirths is greatest during the first and last third of pregnancy; this may have something to do with the development of the interstitial cells in the fetal testis. While it is true that there are more male than female twins (1043:100; the ratio in single births, 1050-60: 100), due to the great preponderance of male pregnancies, the prenatal mortality of male twins is higher, and "as the number of individuals to a birth increases the relative proportion of males to females decreases. Nichols, who collected statistics of over 700,000 pairs of twins, has pointed out that the ratio of males to females decreases from 1059: 1000 in single births to 548:1000 in quadruplets. The Dionne's are girls, and so are most quadruplets of press renown. In sheep, there are over twice as many female as male triplets. For opposing view consult A.S. Parkes.

The occurrence of freemartins, in cattle and more rarely in other animals. A bovine freemartin, probably meaning "farrow heifer," is the female co-twin of a normal bull calf; the female of two-sexed twins. Cattle breeders from Roman times have known that such females are usually sterile, 87 percent or more (some observers claiming even 100 percent) instead of the normal incidence of less than 10 percent. Lillie has shown beyond all questions that a freemartin is a "blighted" female calf fetus with undeveloped or deformed sexual organs (usually internal only), and often with more or less male characteristics due to saturation with antagonistic male sex hormone from it co-twin which interferes with the normal female development. This is possible and occurs only when the chorionic or placental anastomosis between the binovular twins is early and extensive. Either the male shows an earlier sex differentiation and an earlier sex hormone is more "powerful". The former of these ideas suggest that sex is not absolutely determined by the spermatozoon but is profoundly influenced by the environment; the latter, again, the ancient thought of male superiority. Williams, in personal communication, reports "Quintuplets with two males and an asexual. Ten individuals with 4 males and six sexless. There were 8 abortions and two viable young (the twins)." Hartman believes that the process can be reversed in which a male co-twin is sterilized and made more or less asexual or intersexual (sexual intergrade) by the female. He calls these "reciprocal freemartins", and rather believes that both types do occur in man and may explain some cases of intersexuality (Novak). Contrary to a belief once held in rural England, no diminished fertility in the female of two-sexed human twins has been observed because a comparable placenta anastomosis does not occur in man. Sir J.Y. Simpson collected the married history of 123 women born co-twins with males and found that only 11 had no offspring.

Fetal malformations. As a whole, there are probably more male than female fetuses that are, malformed. Dr. D. P. Murphy of Philadelphia, in personal communication, says, "if you were able to secure figures on the sex ratio of 500 cases of any given type of defect you might well find... that the defects in most cases afflict the two sexes about equally." But the available figures show strange sex ratios of congenital deformities. Curiously enough, deformities of the brain and cord, and of congenital hip dislocation are much more common in the female. M.S. Michel of Minneapolis reported in 1928, 57 cases of craniorachischisis, of which 85 percent were female; Malpas, 44 cases of anencephaly with 70 percent females, and 80 of hydrocephalus and spina bifida with 57 percent of that sex. Of 5,494 cases of congenital hip dislocation, 84 percent were females. On the other hand of 3,309 club feet, 65 percent were males. Of 507 cases of harelip-cleft palate gathered from various sources, 55 percent were males. Ballantyne reports the sex ratio of his malformations as follows: iniencephalies, 1 male to 21 females (5 percent males); anencephalies, 10 to 30; genal fissure, 41 to 26; harelip, 180 to 118; diaphragmatic hernia, 47 to 20; preauricular appendages, 21 to 12. These percentages are approximate. He states that there are more female cyclopia and united twins; but more male urinary umbilical fistulas and polydactylies; of extroversion of bladder, male: female: "6 or 7:1"; of transposition of viscera, "2:1." I have not been able to secure much evidence for the suggestion that most pseudohermaphrodites are primarily males, the course of whose early sex differentiation has been altered by the antagonistic sex hormones of the mother. Such evidence would be very interesting. In 980 cases of placenta previa, the male-female sex ratio was 124: 100. While fetal malformations are not good witnesses to any distinctive effect of maleness on the maternal organism, still sex in some way would seem to play a part in their production.

The relation between male pregnancy and toxemia. An old belief, still alive, was that the pregnant woman vomits more if her baby is a boy. David suggests that the cause of the vomiting is something transmitted to the child from the father that is foreign to her blood; that the more the child resembles the father, the more the mother vomits; and that the pigmentation of the other parallels that of the child. In all this, no direct mention of sex diagnosis. Herrmann reports in 1,442 cases of eclampsia a ratio of male to female children of 122:100 (normal ratio, 105:100); in the last four months of pregnancy, this ratio rose to 156: 100; and in those eclamptic individuals with twins, to 173:100.

Serologic studies. These, while not conclusive, evidence a difference between male and female blood and serum greater than that afforded by chance.

The foregoing would seem to justify the conclusion that the introduction of the male element into the female body does produce effects. The mechanism by which the male fetus is protected against the antagonistic sex hormones of the mother is, at times, more or less broken down. Sufficient means and knowledge are not yet at hand to recognize such effects definitely and permit practical sex diagnosis.

The ancient ideas of the qualitative effects of a male pregnancy on the mother comprise a large number of "natural" means to diagnose fetal sex. Hippocrates said that "a woman with a child, if it is a male, has a good color; with a sense of well-being. The face is brighter, the color better, the skin clearer; she is cheerful (Arabian), happy (Indian), and untroubled (Jewish). Many of these may be explained by the belief that the increased heat production, held to be associated with male pregnancy, quickened the circulation and heightened metabolism; suggestion and wishful thinking may have played a role. Finally, however, with these as with many other ancient ideas about fetal sex diagnosis, we may be standing on the edge of an unexplored field of endocrinology.

Freckles, pigmentation, and vomiting were sometimes stated to indicate a boy, though Hippocrates held that freckles meant a girl. While "liver spots," a blotchy skin and a bad or pallid color were usually interpreted to mean a girl, pigmentation, in general, pointed to a boy. There was a widespread belief that the lack of pigmentation of the lineal alba below the naval meant a girl. The endocrinologists have here food for speculative thought. It was also an old idea that the desires of the pregnant women are an expression of the desires or will of the fetus often expressed in dreams. In India, if the pregnant woman dreamed of men's food, the baby would be a boy; in Russia, dreaming of a spring or well, meant a girl; of a knife or club, a boy (Freud?). There was no agreement in the interpretation of changes in sexual desire during pregnancy. Incidentally, the subjective sensations of the pregnant woman have never been considered of great value as evidence in fetal sex diagnosis; but this may be another entirely unexplored clinical field.

The most interesting "natural" means in Group 3, anciently used to foretell sex, have been the supposed effects of the fetus on the pregnant women's excretions: urine, milk, and sputum. A generation ago no one would have dreamed that the diagnosis of pregnancy was possible by an examination of the urine. But in ancient Egypt about 1350B.C. according to the Berlin Medical Papyrus, both pregnancy and sex could be determined by this means. "To see if the women are pregnant or not pregnant: barley and wheat are moistened daily with the women's urine, like dates or pastry in two bags. If they either generate, so will she give birth; if the wheat germinates, so will it be q boy; if the barley germinates, so will it be a girl; if they do not generate, so is she not pregnant." The idea had found its way to Europe by the seventeenth century. "Make two holes in the ground, in one place some wheat, in the other barley, wet with the women's urine and cover with earth. If the wheat sprouts first, the women have a male fetus; if the barley first, a female." The test is mentioned in the old English book, The Experienced Midwife. The manager repeated the experiment in 1933 and reported 8- percent correct prognostications, but his findings have not been corroborated. If any difference in the effect of male and female pregnant urine on the growth of these seeds does exist, it must depend on the presence of some substance produced, directly or indirectly, by the fetus.

There was a curiously widespread idea that the milk (sometimes specified as of the right breast) of a woman pregnant with a male was "tough" and thick. The test was to drop or squirt the milk onto a smooth surface, e.g. glass, a sword or a heated metal plate. If it remained conical or "stood like peas" or clotted, a male pregnancy was indicated; if it spread out or flowed off, a female. If some of the milk dropped into clear water or urine fell to the bottom, a boy was to be born; if it floated or dissolved, a girl. Another test was to knead the milk with meal into a small loaf to be baked over a slow fire; if it shriveled up or burned, a boy; if it "puffed up," a girl. It appears that these tests were occasionally, but much more rarely, applied to blood and urine. Much of the foregoing is not strange to primitive thought about sex.

With the two exceptions, marked vomiting which is still occasionally spoken of as sign of male pregnancy and sport with the pith ball, possibly the only other 'natural" means to diagnose fetal sex, existing in popular thought today, are the changes that "old women" think they discern in the shape and appearance of the pregnant woman's abdomen and back. There is by no means complete agreement; but in general, a hard, prominent, "high" and rounded and broad hip and back bespeak a male pregnancy. An abdomen sometimes described as "egg-shaped" is stated to indicate a female pregnancy. The origin and age of these ideas are not definitely known; some way has a phallic elusion from many wearied questionings and many observations, I am not willing to dismiss the matter as entirely without foundation. Possibly, an endocrine truth may be embodied in his popular persistent belief.

To digress a moment into veterinary medicine, cattle breeders have stated that the calf is more likely to be a male if the front quarters develop first in pregnancy and if the cow goes over term.

In modern times, excepting Frankenhaeuser's fetal heart study in 1859, there is no evidence that either science or scientific medicine concerned itself seriously, if at all, with the diagnosis of fetal sex in utero, until toward the end of the first decade of this century. Since then the problem has been attacked from many angles. Those in Groups 1 and 2 have already been the means employed; and the efforts, in the main, have followed the two ancient lines of thought about the effects of a male fetus on the maternal organism, the one, that they are quantitative; the other, that they are qualitative.

Excepting unsuccessful attempts to demonstrate a higher pH value in the blood of a woman pregnant with a male or a higher basal metabolic rate, the Manoiloff test is possibly the only modern example of the first idea, though not intentionally so in origin.

In ancient thought, all things had sex, which the study of language amply illustrates. The alchemists held that the elements were male and female. E. O Manoiloff, the Russian scientist, has revived that concept. He claims to be able to distinguish between male and female tissues and secretions (first in 1920), to determine the sex of the fetus by examination of the pregnant women's blood, to diagnose the sex of plants, and to separate male from female minerals. He claims sex differentiation from stone to man. As a matter of fact, female sex hormone has been recovered from minerals. Regarding fetal sex diagnosis, Manoiloff believes that a specific hormone from the fetal testis, or from the whole organism of the male fetus, passes into the maternal blood and changes its reaction. To the specially prepared blood is added an oxidizing agent, a reducing agent, an acid and an indicator. The results are determined by the absence or presence of color reaction. The idea of many investigators is that this test represents an oxidation-reduction process, of which the former predominates in the male, the latter in the female; that the substances involved parallelling the metabolic rate; and that the test is one of metabolic rate or level. It's quantitative, and not sex-specific. We are back again at the beginnings; one mark of sex is a difference in metabolic rate. Many modifications of the test have been made and its chemistry is complex; the necessary technic is delicate and subject to much possible error. Manoiloff's claim of 80 percent correct prognostications would seem overoptimistic.

A possible immunity reaction between the pregnant woman and her unborn male child has been the basis of most of the efforts of serology to solve the problem of fetal sex diagnosis during the past twenty-five years. It follows the second ancient idea that one of the effects of a male fetus on the maternal organism is a qualitative change, caused by the elaboration of specific substances, and is a predicated on the four following assumptions; (1) Even early in pregnancy there is sex differentiation in the fetus (morphologically, sex can be distinguished in a fetus 20 mm. Long and six weeks old), which becomes more marked as pregnancy advances. (2) The male secretions i.e. the "maleness," of the fetus passes into the mother's blood. (3) These secretions being "foreign" to her body cells and their products, act as antigens. (4) As a result, the mother produces "antibodies" against the invading "foreign" substances. The demonstration of these hypothetical "antibodies" has been attempted by precipitation reactions, agglutinations, complement fixation tests, the activity of ferments and allergic phenomena. The possibility must be constantly borne in mind that all such serologic tests may be invalidated by previous sensitization.

Petri experimented with precipitin reactions between a cow and steer serums and steer testis extract. Both serums gave precipitations when overlaid with the steer testis preparation, though stronger with the steer serum. The same results were obtained when antitesticular serum (from rabbits injected with this testis preparation) was tested against a cow and steer serums. Even after fractional precipitation of this antitesticular serum by cow serum until precipitation ceased, the addition of steer serum still gave a reaction. By these and other reactions he was able to determine the sex of serums in many cases, but the test was not dependable. Abraham from 1912 to 1914 conducted an extensive series of precipitin experiments. He injected rabbits with male and female pregnant serums and with male and female nonpregnant serums. Combinations and dilutions of serum from these sensitized rabbits were tested for precipitation against serums similar to those injected. His results were also not conclusive. His work stimulated investigation and his article contains an extensive bibliography.

The agglutination or immobilizations of animal and human spermatozoa by the serums of pregnant women has been briefly investigated by me. While the degree of the reactions varied from what might be called complete to none whatsoever, even the markedly positive cases did not seem to be of value in fetal sex diagnosis. Of course, it can be argued that spermatogenesis is not a function of fetal life; that it is not known to what degree "maleness" is dependent on the external secretion of the testis; and that the serums might have been from patients already sensitized. References to other work of this character have not been found.

Complement fixation tests for diagnosing fetal sex were employed by Petri using an extract of the fetal testis, inactivated navel blood, and fresh guinea pig complement. All gave hemoptysis. Others have tried to solve the problem by this method which would seem to merit further investigation. I had a personal interview with an individual who believed that he had succeeded in this method. The New York Academy of Medicine scheduled for the Section of Obstetrics and Gynecology on April 28, 1925, a paper by Isaac Fried, M.D., entitled "The Serodiagnosis of the Sex of the Fetus During Pregnancy," "by invitation." The paper was withdrawn before the day of the meeting arrived. The author's interesting, but not at all convincing, complement fixation test, featuring a very complicated, possibly even fantastic, antigen, was published in the Medical Review of Reviews, August 1924. He claimed 100 percent correct prognostications.

The principle of the Abderhalden test (the formation of proactive (?) ferments against living foreign protein) has been extensively used in trying to foretell fetal sex. Using testis instead of placenta. Waldstein and Erkler in 1913 reported positive results from the action of pregnant serum on the testis, but they considered it due to previous semen absorption and made no mention of is possible to use in fetal sex diagnosis. In 1914 Franz Lehman first suggested that fetal sex might be determined by a modification of Abderhalden test. Later, he attacked the problem himself. Koenigstein of Schauta's clinic in Vienna in 1913 found that there was more destruction of fetal, infant, and steer testis by male than female pregnant serum. In 1917 Kraus and Saudek of Bruenn published their stimulating work done in 1913 and 1914. They employed carefully prepared (kosher) steer testis and pregnant serum, claiming nearly 80 percent correct prognostications. Schaefer of Bumm's clinic tested fetal and adult human testis and calf testis with pregnant serum; the best results were obtained with a fetal testis, but the conclusion reached was that he tests were not reliable. The most determined effort to use a modified Adberhalden test in fetal sex diagnosis was made in 1924 by Luettge and v. Mertz at Sellheim's clinic, the scene of Abderhalden's original work. for a "substrate" they used carefully prepared bull testis (later, a commercial product free from amino acids), which was incubated with the serum to be tested. The high molecular proteins were precipitated from the filtrate by alcohol, using this instead of dialysis. After further filtration, the final fluid was tested for split proteins, presumably produced by the antitesticular ferments in the male pregnant serum, by a ninhydrin color reaction. In 1925 I spent a day in their laboratory, and later in the same year, tried to duplicate their results at the Kilmer Pathological Laboratory. Our first seventeen serums were diagnosed (?) correctly; the next eight were wrong. A large literature for and against the method and its accuracy exists. The originators claimed over 78 percent, even up to 98 percent, correct prognostications. Those interested may consult their book. The optical interferometric method of Loewe-Zeiss has been used by many investigators, especially P. Hirsch, to test the serum after incubation, quantitatively.

Allergic skin reactions have been the basis of a number of attacks on the problem of fetal sex diagnosis. Lehman tried skin inoculations with extract of the animal testis; Koenigstein cutaneous injection of testicular extract in pregnant animals and pregnant women. Their results were not definite. Human semen and extracts thereof, preparations of the testis (both animal and human) and male fetal blood serum have been employed in skin tests on pregnant women by scarification and intradermal injection. The reactions have been sometimes negative, sometimes slightly to markedly positive, frequently bizarre. While the results have been too conflicting to permit definite conclusions as to their ultimate value in prognosticating fetal sex, they have been without question better than those afforded by chance. The most recent report is by Davis who injects intradermally a stock \testicular extract, grades the test by the resulting wheal and reports between 80 and 90 percent correct findings. It is a hope that all these puzzling skin reactions may be better understood when the workers in allergy shall have been able to put their house in order.

Although fetal sex hormones must be the primary cause of any differences that may exist in the effect of fetal sex on the pregnant women, endocrinology to date has disappointed high hopes for solving the problem of fetal sex diagnosis. The male and female sex hormones are closely related chemically, their differentiation in the blood is difficult, and "both male and female stimulating substances can be extracted from both male and female urines" (personal communication from Dr. Carl R. Moore. With the cooperation of Mr. Jesse Briggs of the Kilmer Pathological Laboratory, I have carried on some observations of the number and prominence of the developed follicles in the Friedmann test, to determine any relationship to the sex of the child. The number of observations has been too small to warrant the ay conclusion. Dorn and Sugarman injected intravenously into immature male rabbits, whose tests must be in the inguinal canals and not in the scrotum, the urine of women pregnant in the last trimester of pregnancy. If later examination of the testes of the animal showed increased vascularity and cellularity and beginning spermatogenesis, they believed that they could conclude from their series of cases that the women were pregnant with a female fetus. They thought that they had discovered, in the urine of women carrying a female child, a true and hitherto undiscovered sex hormone which can stimulate the cells in the testicular tubules of the pubescent male rabbit and cause a precocious development." They claimed 94 percent, 80 out of 85 cases, correct prognostications. Other workers have not been able to duplicate their results. Mathieu and Palmar cite numerous references record the results of their own investigations which did not succeed in accurately diagnosing fetal sex and indulge in some interesting speculations. It was inevitable that the hormone test for pregnancy would be employed in an attempt to solve the problem. It is encouraging to remember that endocrinology is the merest infant in the world of medicine.

SUMMARY

All efforts ever made to diagnose the sex of the human fetus in utero may be placed into three groups.

Ancient beliefs about the diagnosis of fetal sex have almost entirely disappeared, but are still of interest, for ancient thought is the basis of nearly all modern attacks upon the problem.

More modern investigations of the problem have one or more representatives in each of the three groups. In the third group, serology and endocrinology have been the mean employed, with encouraging results.

Much thought has been expended and much work is done in this broad field, with its many converging paths of research, as evidenced by the appended bibliography, which is by no means complete.

In the first group are the beliefs that the male comes from the right side of the uterus or the right ovary, and that male pregnancies cause right-sided symptoms in the mother.

In the second group are the beliefs that the physical attributes of the fetus during pregnancy and labor differ in the sexes.

In the third group are the beliefs that the male fetus, through its secretions, affects the mother differently than does a female fetus. These differences in effect may be of degree or kind, and there is some evidence that they do exist. Sufficient knowledge and means are not now at hand to recognize these differences for practical use. This group is the largest.

Modern investigations of the problem have one or more representatives in each group. In the third group, serology and endocrinology have been the mean employed, with encouraging results.

Neither clinical observation, nor serology, nor endocrinology has solved the problem of the fetal sex diagnosis.

That much thought has been expended and much work is done in this broad field, with its many converging paths of research, as evidenced by the appended bibliography, which is by no means complete.

Neither clinical observation, nor serology, nor endocrinology has solved the problem of the fetal sex diagnosis.

CONCLUSION

The correct prognostication of fetal sex would satisfy a great curiosity and answer the pregnant woman's age-old question. It is true that it would not have great practical value. Research along other lines might well produce more solidly beneficent results. It may be true that such diagnosis, if possible early in pregnancy, might increase the incidence of induced abortions, though this does sound a bit timorous and farfetched. The parents made unhappy by knowing beforehand what they were going to have might easily be outweighed by those rejoicing in the knowledge that they would have a child of the sex they most desired. Its discovery might be exploited by the unscrupulous, as was salvarsan in its early history. All these and other objections have been raised. But the fact remains that no permanent harm has ever come by making the way of truth wider or smoother or straighter, or by pushing it a little farther. The diagnosis of fetal sex in utero is one of the unsolved problems of obstetrics. As such, it will remain a challenge. Someday, some eye will see clearly what men have as yet seen only through a glass darkly, or some laboratory worker will present the answer to us face to face. Clinical observation may come into its own someday, and what lies ahead in hormone study is not even dreamed of. The problem may still be solved.

Collapsing the Codes

Problem:CPT, with 900 codes, is the most detailed of the several popular systems for symbolizing clinical activities. Even so, many of the codes are imprecise and could easily be broken down into components. There is moreover little doubt the coding system will need to be steadily expanded in the future to accommodate changes in practice. On the other hand, health insurance third parties have great difficulty coping with changing definitions of what they must pay for, a difficulty made more severe by cost containment pressures. Pennsylvania Blue Shield, for instance, recently found itself mandated to change from a modified CPT-2 system with 4500 codes to CPT-4, with 9000. Since the prevailing fee system is based on historical profiles, there was a strong incentive to collapse 9000 codes back toward the original 4500 through computer algorithms (program instructions) which essentially treated two new codes like one old one. Sometimes, the new system had fewer gradations of a procedure than the old one, and this problem was resolved by eliminating one or more of the old gradations; when the gradation eliminated was the most highly paid of several physician complaints have been accusatory.

we thus have a physician community protesting that codes are being collapsed to their disadvantage, without their knowledge or consent. We also have an insurance community which is paranoid about the motives of a medical profession which appears to be endlessly exploding the codes. Each group is able to provide illustrations of bad faith behavior by the other, but in fact, both groups need to work together to reduce inevitable friction at the interface.

Proposal: That a joint project be undertaken to specify the rules for making A + B = C, with the understanding that when A+B is agreed to be equivalent under either form of presentation on claims forms. Further, that a mini form of Relative value scale be created, limited to and unique to gradations within a single procedural category, wherever experience shows there are legitimate disputes about using the value of a single payment. Finally, for that large group of instances in which conducting the project activities in an advisory capacity producing public opinions, and if necessary, minority opinions for the guidance of local negotiations.

 

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12 Blogs

Macroeconomics of The 2007 Collapse
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                    <p class= My Years at Stockley
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Computers and the Regulation of Medicine.
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Health Insurance National, and Otherwise
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PRO DATA AND THE QUALITY OF MEDICAL CARE
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Piggybacking Claims and Crossing them over.
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Going Down with All Flags Flying
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Determining the Sex of The Human Fetus in Utero
Originally written in 1933 by Stuart B. Blakely MD. and rewritten in 2018 by George Ross Fisher MD (his son-in-law) and Margaret Fisher. MD (his grand-daughter). That is, before and after technology had totally changed the medical premises of the beginnings of human life.

Collapsing the Codes
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