I’ve never applied leeches in my role as a medical trainee or Internist/Geriatrician. Like Honey and Maggots, leeches are a surgical therapy. Honey is sometimes used in large open wounds to promote healing and prevent infection. Maggots play a similar role in the debridement of wounds that cannot be closed surgically. Leeches, on the other hand, are most often used in plastic and reconstructive surgery where the flow of blood to a body part is being compromised by deep tissue hemorrhage that increases capillary pressure and impedes the flow of blood. So, despite being blood-sucking parasites, leeches do have a beneficial role in modern medicine.
I read a LinkedIn item this morning that made me think of leeches. Benjy, my former workmate and strong business ally from both the worlds of state government and Medicaid managed care posted a Fact asserting that 90% of every Medicaid dollar goes to “patient care.” That’s when the leeches came to mind.
How we each understand the world depends much on what we know, what we have experienced, and what we believe. That is, if there is an objective reality, it is interpreted by each individual in an idiosyncratic way. That is certainly the case here. When we say that 90% of every Medicaid dollar is spent on patient care, we need to ask what constitutes patient care.
For example, managed care organizations calculate a metric called the Medical Loss Ratio (MLR); it also goes by other names such as Medical Expense Ratio. The MLR is that portion of an insurer’s income that goes to pay for medical expenses. In our plans, it typically ran around 80+%. So, what happened to the other 15-20%? Some went into administrative expenses, and the rest was profit. The profit margin was spent on various things such as shareholder dividends, lobbying, a war chest, and a variety of investments – leeches, I would say.
Now, of the 80+% that went into medical expenses, a portion of that 80% went into profits. Profits for the medical professionals, for the durable medical equipment companies, for hospitals and their shareholders or non-profit organizations’ war chests, for pharma companies and their retailers, etc. In other words, 90% of the health care dollar did not go into direct patient care rather into the supply chain that provided that care.
We Americans do not have a health care system. We have a complex array of health care businesses. Every time another middleman gets into the supply chain, it adds another leech. In a capitalist system, everyone in the supply chain is a potential leech. I don’t have a reliable figure for how much of the American healthcare dollar goes into non-healthcare leeching activity, but I’m going to guess that it is more than 50%. Every time that a private equity outfit enters healthcare (buying up outpatient clinics, minor ERs, staffing organizations or anything else in the patient care supply chain), I hear the leeches sucking the buyers of healthcare dry.
This brings me to the relationship that Medicaid, Medicare and private insurers have to the healthcare supply chain. They are not the purchasers of care, as they would have us believe. They are simply the payers. The actual purchasers of care are the American people. In the universe of private insurance, the purchasers are the policy holders. In the Medicare and Medicaid universe, the purchasers are the American taxpayers.
When doctors apply leeches to a patient, they sometimes need to transfuse the patient because the leeches are simply too great a burden for the patient’s blood-producing resources. It’s that or remove the leeches and find an alternative way to deal with the underlying problem. Maybe we should be thinking about healthcare financing in a different way – a way that involves more patient care and a smaller burden from its leeches.