Sunday, April 26, 2015

TIME VALUE of MONEY in Biz and Medicine

You know how you want something so bad that you can taste it? It was one of those wants. We all have them from time to time. Things that matter little in the scheme of things, yet at the appointed hour they burst open this bouquet of desire. I thought as I stood in line for the future value of the shiny product. Hmm… it could do a lot of things that would make life easier for me. Easier, did I say? Maybe a bit more complicated is the correct phrase. Eventually, ending up third in line for the shiny object while waiting, you know that ethereally nebulous thing that pricks a bubble in your conscience, pricked mine and I proceeded to exit the line to the gaping mouths of the patrons behind me who had gotten to know one another over the past few hours. Yup, I left. And here is why…
Before I go there, here is a question for you. Is buying a used car better in time of value, all things being equal in quality, better for you? The answer will surprise you. Ask any sane person and he will tell you that the depreciated value of a product is cheaper than buying it brand spanking new. Less money same bang for the buck – four wheels, an engine and a personally desired chassis is the same as under the lights of the showroom. This is a form of time value of money.

Ok, now keep that in your mind as I go down this rabbit hole. And there are plenty of finance-majored caterpillars asking, “Who are you?”

There is something called Time Value of Money or TVM. You might have heard of it. It turns out TVM is the biggest single business issue that occupies a financier, financial analyst, manager, a CEO and anyone else involved in the complex world of commerce.

Tomorrow’s dollar will buy just a bit less than today’s. It so happens that this rude thing is called inflation, or “less buying power.” This little culprit has robbed us of our wealth in many different ways. Most people have never even thought much less dreamt about them. Look up the difference between “nominal” and “real.” Go ahead look it up. This can wait.

Let us say we have $100 in our pocket and the current interest rate is 5% then the simple equation to understand the Future Value (FV) as it relates to Present Value (PV) of that $100 is:
FV = PV (1 + r) and (r = interest rate) = 100(1+ 0.05) = $105 The Future value rises doesn’t it…also meaning that what cost $100 now costs $105. Or the future buying power of that $1 is now $0.95. Oh dear!

So if we want to know the FV in n years we plug in the formula: FV = PV (1 + r)^n where “n” represents the number of years = 100 (1 + 0.05) ^5 =$127.62 which is more than the simple interest rate of 5% yielding $125 (or $105+$105+$105+$105+$105=125) that is if the interest was added only to the initial principle and not on the accrued amount. Simple isn’t it? But look here, here is another nifty thing about this formula; If you want to see what today’s value is for tomorrow’s money than a simple algebraic magic gives us:

PV = FV (1/1 + r) ^n (n being the number of years) You see, nothing to it. Got it?

Now let us look at how big people exploit this little formula to their advantage…

Heard of the Revenue Cycle? That is if you sell a product, you send an invoice and the buyer then has 30, 60 or 90 days to pay off the bill. Here is the subtle catch, the buyer can use that money (designated to the seller) for other things and since time is advancing, the value of the amount owed is also dwindling in real terms of purchasing power. Huh? You say, but it is not even a year yet. How can that be?

Elementary, there is another beauteous term called “Compounding Interest.”  If the buyer’s money is compounding interest on a daily rate his value in 90 days based on compounding interest will be a bit more than if he pays it off immediately. So he has taken advantage of the Future Value of today’s money. Or in simplistic terms he is paying with dollars that have less buying power. Smart, eh? Oh, by the way the formula of the continuously compounding rate (and that my friend is the real golden goose) is slightly modified. I call it “Pert. ”

P = Principal amount (Initial Investment)
r = Annual Interest Rate ( as a decimal)
t = Number in years
A = Amount after time t

FV = P * (e)^rt  ~here “e” is the natural log (2.7182818) and “r” is interest rate and “t” is time in years. So you see if the bank for instance charges you a continuously compounding rate but pays you interest on your savings at an annual compounding rate, guess who wins? = 100 * (2.71828) ^0.05*5 = $128.40 vs $127.62. You won’t scoff at that number if you figure those transactions in the billions!
Let us see how the Medical Revenue Cycle permits such shenanigans. If you want to know a little more about Medical Revenue Cycles it is here.

A doctor sees the patient who needs a surgical procedure. After the operation the doctor sends a bill to the insurance company. You might as well know this little known caveat up front that almost 11-18% of the bills are automatically denied, some for not dotting the (i)s and others for not crossing the (t)s and still others because they can, by requiring more justification needed for the surgery. It’s the need based on “patient’s welfare” excuse as if they the clerks know better than the surgeon. They DON’T (my emphasis)! So the delay continues and finally the payments are made sometime 6 -12 weeks later for amounts much lower than what was billed. I know you are clamoring to know a surgeon’s bill say for a cholecystectomy. Current Medicare and other insurer payments range from $367-580. That is it and within that payment is bundled a 90 day post-operative free included global follow-up (that means the doctor is responsible for all care pertaining to the surgery)! Guess what, but I guess by now you have already figured out the opportunity cost (the cost of using that money for other purposes by the insurer or keeping it in the investment vehicle of their choice where it would yield a continuously compounding rate will deliver a higher amount than what is paid out to the doctor both by delay (TVM) and by denying (TVM) and by decreasing the reimbursement actually due. A win-win for the good ol’ insurer dudes!

These dollar amounts are miniscule, you might say, “What’s the clamor all about?” Now simply multiply the 850,000 physicians overseeing the care of 320,000,000 people in the United States on a daily basis and the numbers get huge. I mean astronomically huge!  Hence, the delay tactics by the insurers to enrich themselves with the ballooning Future Value is more than a delay tactic, It is a handsome reward! And that is how the AVERAGE Healthcare CEO salary is now tipping at $11.4 million apiece. These CEOs are , most of them anyway, if anything, not dummies!

You might see businesses sending you invoices that say if you pay in 15 days you can get a 2% discount ($1 in hand is better than $2 in the future) or after 30 days they charge 2% and 5% after 60 days. They have it calculated to a tee. They ain’t losing money honey! Based on receiving their money quickly, they can put that money to investment which can have a better rate of return than the 2% they give you. And you thought CEOs just had wild parties. They do but after they finish counting their loot.

Hopefully you have a better understanding on games business people play.

ABIM Retreat Resort

I was going to end there but this juicy script of the ABIM redirected my attention.
Let us start with a company that makes a widget. The widget company obviously has costs to make the widget, right? So the money from the sale (called Revenue) of the widget  goes to pay off the expenses related to the widget and what is left, is called in business parlance “Gross Margin.” If operational costs are subtracted from that then it is called EBIT (Earnings before Interest (on loans) and Taxes.  So in ABIM’s case they claim 200,000 physicians are certified and roughly 12,000-14,000 physicians take their certification and recertifying examination annually (based on ABIM website) and 80,504 certified physicians are taking part in MOC every 2 years. Given what I have paid in the past, I would put the cost at somewhere around an average of $2000 ($1385-Internal Medicine-$2830 Sub Specialty- from ABIM website). If you multiply the number of physicians to the cost of the exam, that is big money. Add $500 per MOC event to that and it takes on a whole new meaning about BIG money! And that is all Cash receipts up front. Their expenses, they claim, are the cost of making up questions and organizing a Gestapo-style examination where a physician is “searched” before entry and afforded other indignities. And if you cancel before the exam date you forfeit 30-45% of the fee.  Huh? I guess they plan to limit cash flow reduction issues – read on. They claim creating the test questions and organization of these examinations costs a lot. And self-promotional articles as “Evidence” for the recertification and MOC needs cost money. They might have to pay to blind the co-authors about Conflicts of Interest, maybe? Okay, so deduct maybe, what, 20% on the high side? The left over is their Gross Margin. And where the money goes in this non-profit 501 (c) 3 organization is to pay the executive compensation. Getting back to the TVM, the money they take from physicians is at least 3 months before the certifying examination and at the beginning of each segment of the MOC. The computerized certifying examination results are reported 3 months later – minimal effort on the human element just tell the computer what number of doctors should fail so that they can come back for another examination and pay for it again. The excess dollars in the kitty after the lavish $1 million salaries are disbursed, going towards the multimillion dollar condo in Philadelphia and the Mercedes limousine under the auspices of the ABIM Foundation (a valued partner for slush funds) and to cater to their extremely secretive meetings about how to write more examination questions.

Photo from Newsweek Article

Kurt Eichenwald exposed the Accrual-based accounting thatABIM is doing. It appears that their net asset value which is based on the Present Value of the discounted Future Cash Flows is propped up to a robust number while simultaneously bleeding out the cash for Executive Compensations and other expensive resort “Retreats.” They are hoping that the Future CashFlows will continue to grow as a consequence of “undertaking this herculean effort for the public good.” What they might not have considered was the fact-finding- storm that led to a physician backlash over MOC and is going to leak some future cash flow. One would think that their estimates of the Present Value of their discounted future cash flows will drop significantly in the very near future. You think? The future of this new Present Value is going to be interesting to behold as less comes in to pay those handsome salaries. Maybe put the Philly condo up for sale (for saving face) and go on a diet at the retreats? Possibly?  Just maybe? Maybe? Uh? (That sentence reminds me of MacFarlane’s Stewie).

It is time to consider what will be from what is and likewise what is from what will be. It is also time for physicians to consider why pay into a corrupted system.  That money for MOC and recertifying examination has opportunity costs for better investments than going through the rigors of an examination like MOC/ABIM recertification conducted in a Gulag environment and holds no beneficial, educational, value to a physician or to the patient, unless you are a masochist - there I said it! That money is spent better elsewhere, in your practice, taking care of your patient!
There you have it, a peek from the business end of the stick and the derriere of the physicians; a story about the trials and tribulations of the many who serve a few (masters).

Oh, by the way, I got that shiny object three months later for half the price…

Wednesday, April 22, 2015


Strange how time travels
Away from the moment
Leaving behind memories
Rich and poor.

Like a broken cup
Shattered by a fall
Accidentally moved
Off the table’s edge.
Now shards surround;
Pieces. If all placed
Neatly together would
Make the cup, But no.

Like the writing hand
Having writ moves on
The delicate impertinent ink
Marring the parchment
Filling the shallow valleys
And riding the rough ridges
Forever in the life
Of that pulp, ingrained
With memories on its surface
Dissolve to the first rain drop.

Memories too of childhood
Ghostly beings in ether's dance
Moving further and further
Away from then
Stretching back into oblivion.

Echoes of tortured minds
Leaning this way and that
Filling the space
With colors and black.
You cannot pluck the petal
From the rose, yet still
Smell the sweet smell
And only imagine
What was,
When it was.

The minute hand
Pulls the hour hand
Only one way.

Ah time your arrow
Has, but one direction
Yet you curve under gravity
And might bend to meet the edges
To make travel through moments
Possible. Even if for a fraction
Of a second. Like the crackle
Of lightening expanding
Space and registering time
With the sound of fury
And like that moment
Gone. Lost to oblivion
Within ghostly memories
Haunted by time.

Friday, April 17, 2015


“It’s a 4.5 Liter engine with a 325 pound-foot torque, at 7400 rpm and a 3.81 displacement puts this car ahead of any other…”and attention deficit took over. The backdrop of a car showroom and the voice of a salesman is sweet harmony to imagination.

Yes, I wondered, we can certainly measure the volumetrics of the car engine in precise detail. We can measure most anything on the planet with exquisite precision.

From ancient time when Eratosthenes was able to measure the circumference of the earth to within a few stadia (plural for stadium), man has been on this quest to quantify then qualify through measurement anything that exists on earth, from ether to the rock of Gibraltar. Time has allowed us to gather more and more measuring tools. From ancient times when the distance between the earth and the sun, aptly named Astronomical Unit = approximately 93 million miles, took many failures of measurement from Aristarchus to Kepler, finally it was Christiaan Huygens who determined that it was equal to 24,000 earth radii, man’s quest to measure never wavered. 

We came to find out that the Cesium radiation period determines that "The second is the duration of 9,192,631,770 periods of the radiation corresponding to the transition between the two hyperfine levels of the ground state of the caesium-133 atom." And using this information, humans devised the Atomic clock. Time linearity was harnessed. Progress! 
We can measure the very large galaxies millions of light years away through cosmological red shifts to the miniscule cellular interiors and thence to the absurdly minute small atoms within, with tunneling microscopes. We can smash protons and electrons together to reveal the approximate behavior of the “big bang.” We can approximate the energy of the Higgs boson (the God Particle) at 125 GeV based on mathematical calculations after the smash. And Einstein who could imagine the Spooky entanglements mathematically decades ago was experimentally proven correct!

Image of Saturn surface from the Voyager

Satellites hover and tell us our positions within inches and we send a spacecraft hurtling past into into the interstellar space, named "Voyager." Human ingenuity is Amazing! 

When it comes to humans, measuring humans, we have been even more curious; the developing fetus on a 3-dimensional sonogram lays out features of the baby vividly and from birth starting with the APGAR score to the baby’s height and weight to blood pressure and red cell volume, from intraocular pressure to intra-arterial pressure, from the speed of electrical impulse generation in the brain and its impact on the synapse to the beat generation from the Purkinjee fibers to the myocardial cell contraction, almost everything is measured and quantified. We measure salts, hormones, enzymes and other sediments including circulating tumor cells in the blood. We tie behavior to psycho-neuro-chemicals in the brain. We measure the change in ratios of various elements from health to disease. We check and check and recheck to stay healthy. We graph circadian rhythms and everything from circulation in clogged arteries to emotional volatility, to cancer and throw them all in the stress-me basket. Indeed we have arrived at our purgatory! 
Today, however we have a seismic shift in our thinking as we find a new pleasure in measuring the genes and their mutations that cause loss or gain of genetic function. Some of us have come to realize that genes are motivated by nature primarily and through nurture secondarily in equal measure. We have learnt that miRNAs and methylation processes constantly modulate gene function via external pressures. Oh yes, we can measure the human milieu quite well. Essentially down to what makes us tick. We can outline functional paths within our brain, the moment life begins and even have the audacity for perpetuating a lack of responsibility, to subsume our behavior to the function of a gene code. We can map the brain yet remain searching for the elusive mind, just like we have the body but always are on the look out for the soul? Ah yes, we are the Lewis and Clark muddling through the forests, not figuratively but metaphorically, of digital 1s and 0s and calling it the new dawn!

And the new sheriff in town wants to measure something else. His particular penchant is trying to measure a different metric; the human emotion. He seems to think if we can measure the happiness and quality of that happiness or sadness then we would have measure of performance just like the 10 point numerical scale of pain. Yet what he fails to recognize is the vice within the 10-point pain scale. Is my 5 point pain as a stoic equal to your 5-point volatile emotional pain? If the answer is yes then I guess the metric is valid. If the answer is no then we better go barking up a different tree. What do you think? Where is the threshold? Some qualifiers are definitely needed, “oh but that would make it so difficult!” Whether we use the numerical scale or the Wong-Baker FACES pain scale the answer would be the same. The thinking goes…if we can tie emotions to a scale and the scale to value then we can tie cost to value and voila, problem of costs in healthcare will be solved. The bureaucrats crackle their knuckles as their salivary drools thicken. Does the smile mean happiness and does a frown mean anger, always?

Alas even Kant at his most vulnerable in his hardened shell of the categorical imperatives would have shied away from such acts of calumny. As I understand Kant’s deontological ethical philosophy, he would believe that an action should be judged by its implications, “Act only according to that maxim which you can at the same time will as universal law.” Would such actions become the universal law?  But hey, forget those philosophical fire-hoses of discretion. This is the brave new world, where anything goes just to “feel good,” or be in the act of “thinking of doing good,” or be involved in the “public good” business.  There is no withholding any assistance from the passions but allowing them to promulgate thoughts and those thoughts into actions that hold hostage an entire society. The hypothetical imperatives have now become the categorical imperatives.

The world has changed stupid, get with the program!
Similarly quality of a human state is a difficult measure. The moment to moment emotional energies that crackle through the brain change the internal and external emotions of the human being. I feel good and the thought of a lost friend kills that feeling. I feel sad and the thought of winning a prize elates me. Measuring such volatility and using that as the parameter of success is tantamount to, perhaps foolhardiness? Must we then ask for everything that is going on in the brain and the mindfulness on a momentary basis? Mustn't we? Or can we compartmentalize, as the experts do writing lengthy treatises?
If value was being judged by a single individual who also happens to have her emotional cake to bake in the measurement, well then all bets should be off. Wouldn't you agree? The multivariate of the "measured" and the "measurer" would be in play and confound answers on a large scale. Yet to a mind indulged with the liquor of metrics none of that matters. Reality is that the "measurer" would have to have their emotive moment to moment state of being, assessed and recorded in parallel too! Maybe the human being is a mathematical model, with limbs tied to the Golden Ratio n’ all and as such can and should be measured for functional efficiency that could be the surrogate to a form of well being? If that's possible?

Speaking of functional efficiency, productivity is one measure that can be allocated to the value of good health, but therein lie the specter of employment, entitlement, vacation time and desire. “I am well,” suddenly takes on a different meaning in different circumstance as does “I am not feeling well.” Speaking from the dais and pontificating the virtues of life before 75 years of age is all well and good, but don’t these high minded priests and priestesses remember what “Said a blade of grass?”  Functional efficiency  is now indeed rooted in a foul jar of expertise!
So what do we do?
How do we measure a human being’s quality? Or for that matter, how do we measure a physician’s work in helping his/her fellow man/woman survive through illness and gain that quality? Oh that one is easy. If the illness is appendicitis, an uncomplicated appendectomy is the answer, unless of course an anomalous artery is nearby or a co-morbid state decides to exert its influence. If it is pneumonia then an antibiotic is mostly curative, unless you develop an allergy to the antibiotic. After all we are all human beings made to order under precise sets of rules and creative force. Aren't we? But what if it is an incurable chronic ailment like diabetes or arthritis or cancer? Is cure the measure? If it is, the best professors in the ivory towers would fail the test. Wouldn't they? They would never admit it though. But let’s just keep that to ourselves.
Scoring value is a difficult thing. A patient recovering from an illness dealt with the news of hospital stay costs would necessarily be disheartened and score low on the “Happy Quality Scale.” Meanwhile a terminally ill patient might have found peace in his or her wretched state and score high. How would that impact the score? A non-compliant patient due to medication cost or lack of access would not be too happy with the world. A compliant patient with dwindling resources would equally not give a smile willingly.
So we arrive at this conundrum of lunacy created by a confederacy of some "very intelligent thinkers” that everything from spit to pee and blood to tears is measurable, hence so should the real quality of emotion. And measuring emotions has value and value is therefore quality and quality can be paid in dollars.

The "turfing" war is about to begin in earnest among well-intentioned physicians!
Therefore if we weight the sampling errors appropriately and place alphas and betas in the equations we would arrive at a formula that will guide the value of therapy as benefit to the patient. Further derivation from that would justify the appropriate reimbursement to the hapless physician. Are there Avogadro's constant or Plank's constants for human beings that can be fitted into our equation to gain that subtle but elusive inference? Not yet! Although the reactive heuristic makes us act as if we do, by latching on to the Confidence Coefficient of 1.96 and with that and the statistical jargon we attempt to prove our hypotheses time and time again, forgetting what the Nobel Laureate Philip Anderson said, "Many good scientist instinctively distrust a measurement which is always on the ragged edge of "statistical significance" and have learned to be very skeptical of marginal statistics."
The new HR-2 MACRA Bill soon to be signed into law, quantifies such actions and emotions- should anyone care to understand, will do the following: Derive risk adjustment calculations, Quality and Outcome metrics, case management, resource use monitoring, interoperability of the EHRs, establish data registries, develop practice assessment checklists, determine the operability of the physician NPIs and their ability to prescribe…and on and on and on, you get the message! Happy navigating the tall grass…
We thus arrive at Kafka's "Nothing alive can be calculated!"

“So the monthly lease on that would be…” I was all ears!

Saturday, April 11, 2015


Now you might have heard about the Dark Pools. No they are not found near the Dead Sea, umm maybe metaphorically one might say they lurk there.

Let me give a very novice kind of a take on these things called “Dark Pools.”

First they are not pools of water. Nothing can swim in them but things can be dunked in them. People can get wet in them and come out “dried out like a prune.” They are dark, because the only light is from the “one who shines it.” Everything is quiet, nary a ripple, just the chaotic, whirlpool like or tsunami-like mixing and churning goings on below the surface. Thus the “oxy” in the “moron” is the light shiner and the others are well, dare I say, “morons.”

To get a real grip on “Dark Pools” it is best to Google the term and you will get the gist. For the more inclined there are several books about the subject and has been captured nicely in “The Flash Boys.”
So there in the dark pools as estimated by some, is almost 20%-40% of the wealth that never sees the light of day, but transacts as if the sun never sets. Stocks trade between well-known large entities like the Morgans, the Stanleys, the BlackRock, the Barclays, the Citadels, the Millennium, the Renaissance, the Two Sigmas and others of the world. In the darkness of daylight they trade large portfolios with no stock price movements for each transaction, while outside in the cold street outside on the ticker tape the stock price shows large gyrations to the uninitiated.

 Most days the dark pools win, unless of course the Algos are at it (aka High Frequency Trading or 70% of Market trading). These wily Quant-satisfied, mathematically aligned codes of IFTTT are always on the lookout for micro-asymmetries in data availability and gain from select information a micro-second makes.

 "So you see, you poor soul, you have no way to win, just plenty of ways to lose!"

There is another “Dark Pool” cluster in DC, where "the dodgy air of opportunism and profiteering" is always in full swing.. This one controls all the other Dark Pools. This one is well-connected and trades favors between competing lobbyists. The colors might be blinding but the intent is there to trade and win for the self. Pinstripes move in and out of these large cavernous halls, slipping favors that only come to light if the powerful on the top are slighted in any small way. You want to fly to the Bahamas, or a Getaway Island where other measly human creatures cannot step foot, there is a flight for you in Champagne-bubbling first class lounge. Oh and yes, lest I forget, if you happen to be in this class of classes, you can participate in a soon-to-be-sky-rocketing-stock that will make you fortunes so you don’t have to read anything you undertake now or in the future. Just take the bicoastal flight in pure luxurious comfort.

And speaking of Algo codes, unlike the Mid-town Manhattan transfers where milliseconds matter, here the Algos churn at a breathtaking snail’s pace. The Zeno’s paradox is fully in play and the closer you get embalmed in your pinstriped, well-coiffed hairdo, the wealthier you feel.  The trouble with these Algos is that the old code much like the Microsoft’s Windows Program only gets overwritten and the old code is never deleted and likewise needs layers upon layers for corrective actions, which only exacerbate the underlying premise. Eventually in this morass, no one knows what is going on and the Red Queen can at will haul off with, “Off with their heads!” and be heralded as the great monarch.

Medicine, you knew this was a-coming, has large clusters of dark pools and Algos committed to serving it. The clusters reside in Universities and the Halls of Congress. They are called the experts who partake in the walking-in-and-out of the singularly well-known address in the world. They rejoice in lengthy monologues at other universities or places where anyone will listen to them or at the seats of government, where everyone pretends to listen but dreams of the first-class promised vacation. These clever brutes employ their wicked intellect to douse the flames of thought and create complex Algos under the guise of “Public Good,” and “Choosing Wisely” to manifest the meaning in their "lord’s" prayer. Their "lord" is whomever has the throne and control of their actions. To wit, the EMRs so proclaimed to change medicine are nothing more than a form of Algo duping in the reverse. They collect data for insurers and policy makers for control and command and not for the benefit of the patients. This kind of Brownian movement within the small enclave of self-service in these ivory-dripping tower inhabitants is often considered progress. Meanwhile pressed by such nonsense, the obedient, fearful minds lose all color, their eyes turn joyless and bland, and everything about them turns robotic as they hurry their way onto an early date with the Reaper.

"The seeming truth which cunning times put on
To entrap the wisest." - Shakespeare, "The Merchant of Venice"

Like the HR2 Bill passed by Congress, considered as an SGR fix for the “poor docs who have suffered such interminable uncertainty,” they weigh in with a hammer of more provisions to indenture the servitude of the physicians. In legal jargon printed over 263 pages there are interesting roadblocks; HHS Secretary’s control of who can write prescriptions based on the “recognized” NPI number ( If you do not participate in Medicare, your NPI will not be recognized and neither will your prescriptions-so essentially you cannot treat patients), the lobbied MOC need for “Physician Quality Reporting” when MOC has not to this date shown any benefit for the patients or their physicians, but it makes good money for the ABIM/ABMS, A soon to exist, colossal change in reimbursement through the ACO (Accreditable Care Organization), P4P (Pay for Performance) and APM (Alternate Payment Model) and penalties and bonuses to be determined at a later date by a single person-the HHS Secretary is being promulgated. Monarchy has a new name. Sure, the 21% SGR is being removed but it is being replaced by an even more onerous and medicine-destroying, guideline-mandated, population-based non-individual management of a patient’s illness based on cost and resource consumption-the Hippocratic Oath and the ethical standards-be-damned version!

Horrific, you say? Where have you been ol’ chap?

A friendly colleague @RogueRad asked this question, “Do you think this is how the Eloi will have developed?”
My reply:  “If Morlock pathos is to Eloi physiology, then Eloi pathos is to utopian fantasy?”

@RogueRad reply: “Progenitors of Well's utopia didn't believe in utopia. They were lazy. That's the real problem - laziness. Intellectual laziness”

My reply: “Granted Intellect is cake's foundation & laziness is the oozed icing. What if there is no foundation? Then… "Pass it then read it?"

@RogueRad reply:  “You're correct. If the foundation, higher education, is shaky then the icing will topple.”

For those needing info about the H.G.Wells "Morlock and Eloi" species:
The Eloi are pretty and the Morlocks are not
The Eloi are dumb and the Morlocks are not (or, at least, not as dumb)
The Eloi wear clothes, the Morlocks do not
The Eloi eat fruit, the Morlocks seriously seriously do not.
Perhaps most important, the Morlocks work and the Eloi do not.

The foundation crumbles under the weight of pseudo-intellectualism to guide the weary populace as these self-proclaimed intellectuals slurp the icing and fall into a diabetic coma of oblivion.

PS: The term "Algo Duping" borrowed from @MedicalQuack

Saturday, April 4, 2015


Several years ago, my colleague sitting on the far side of the medical lounge piped in “Those were good years!” He was wearing his green surgical smocks with the booties still covering his shoes. He had just finished removing a diseased gall bladder. He looked tired. “In the 80s and 90s we did what we had to do and got paid for the hard work and we were respected. Now it is a different game.” He fell silent on the weight of those words. His shoulders sagged and his head rested against his clasped hands in the back of his neck. “They were great, weren't they?” another colleague piped in.
Indeed those were good times to be in the service of humanity, although the pump had been primed a few decades prior to blow up the “healthcare bubble.”

The Dawn of Public Money:
In 1965 with a signature of the President, The United States offered elderly people on fixed incomes and others with disabilities a safety net of healthcare protection. President Johnson remarked, "Under this plan that the committee is recommending, every American over 65 years of age will guarantee himself comprehensive hospital and medical protection for the rest of his life." It came to be known as Medicare. Medicaid, the other sister agency was specifically for the impoverished and disabled individuals with limited means. Both services were under the umbrella of CMS a division of U.S. HHS Agency. The politicians to the great delight of the voters, created this well-spring of options and the doctors were encouraged to accept assignments for reimbursements against services provided. The patients (the elderly and indigent voters) were saved from filing the claims. The money exchange occurred between massive bureaucracies and both the physician and the patient became oblivious to the costs. As the tax payer funded dollars grew in size and scale, the bounty could be had for anyone who could provide a “recognized” service. The doctors worked 12-14 hours a day as the demand for care grew. There was no “skin in the game,” and no “horse in the race,” neither at the patient level since they only had to pay co-pay, which was a meager amount or the doctor who could ask for diagnostic tests to satisfy any and all potential differentials bothering his or her mind. Meanwhile some entrepreneurial doctors and businessmen and women created businesses that catered to the needs of the patients by providing high cost diagnostic procedures. Some created multi-specialty group practices with scores of physicians the likes of which not seen before. The names on the letter-head looked like a law firm from New York. As Medicare turns 50 years old, the creaks and wrinkles are evident. The system his bloated with administrative costs and is reaching into 1/5th of the GDP.

Pharma Bonanza:
Seeing the bonanza of tax-payer money, the pharmaceutical companies started advertising heavily on television, radio and rag magazines in a direct-to patient campaign, in order to influence the patients. The cost of drugs rose exponentially, even medicine like penicillin which were to be had for 5-cents-a-pill suddenly and inexplicably cost $1.50-a-pill. The newer biotechnology monoclonal antibody drugs were a different breed. These immunological modifiers cost close to $100,000 per patient per year and the costs were justified by their complexity in creation, “due to the stringent and arduous FDA requirements needed to complete studies to prove the medicine’s worth.” The first of these drugs in cancer care to hit the market was Dendreon’s Provenge used in Prostate Cancer.

This drug was a first in class that was produced using the patient’s own Immune Cells against the cancer, an ingenious idea to say the least. The drug provided a 4-month increment in survival for a $93,000 cost. There was a muted hue and cry from the public and the physicians. The Pharmaceutical companies started advertisement campaigns: “Have yourself tested,” was the banner of the day. Urologists tested every man over 50 with a PSA test and study after study called for early diagnosis and potential for cure against prostate cancer. Breast surgeons clamored for mammograms, Gynecologists urged PAP smears and pelvic examinations as the rigor of the day required. Medicine was in a full swing of ‘capture it early and live another day,’ mode.

Hospital Windfall and Control:
Hospitals too got in on the act. Some used creative coding methods to receive windfall from the tax-payer dollars. Everyone got wealthy through the “healthism” culture. More and more people lined up in doctor offices for “this” or “that.” The doctor complied because (s)he had to address each issue. Seeing the physician income reported in various magazines, the lawyers started feeding on the information and the vicious cycle of more testing to CYA (Cover Your Ass) became the agency of the day. It served two purposes in the minds of the physicians; 1. It generated income and 2. It potentially prevented lawsuits. Pete Stark a Congressman from California wrote a law into effect discouraging any physician from enriching him or herself by creating diagnostic or therapeutic businesses in which he was not a member/owner. The Stark Law had three iterations and the venerable Stark Law III is still in effect. The states also discouraged individual ownership of outpatient facilities as the hospital lobby saw a decline in easy money flow from low-complexity procedures being vented out to those outpatient centers at 1/10th the cost.

The hospitals however were successful in curbing these business ventures of the physician entrepreneurs through the force of their lobby. Henceforth all outpatient facilities had to have 51% ownership by a neighboring hospital to obtain a “Certificate of Need.” Studies started appearing in journals that outpatient facilities were not providing safe procedures. They tried and successfully convinced the political laity that “outpatient infection was a never event!” the public was sold and the American Hospital Association rejoiced in their Gotcha moment! More and more doctors unable to meet the demands of the mandates got hired by hospitals. The Hospital Revenues in 2012 are below:
Total net revenue: $821.3 billion
• Total expenses: $756.9 billion
• Cumulative profit: $64.4 billion
• Average revenue per hospital: $164.3 million
• Average profit per hospital: $12.9 million
• Average profit per inpatient bed: $80,465

Graphic representation of the Revenue/Income streams of Doctors (in Black & Yellow) and the INTERMEDIARIES (in Red).

Administrators and CEOs enjoy the growth bonanza...

Meanwhile the Physician salary continues to implode:

The Curbs:
The privateering was about to stop soon however. The culture of excess could not ripen and like pears or apples, not rot off the tree. The physician services started getting denied and more and more physician offices had to hire extra help to keep up with the “Medical Revenue Cycle” created by the bureaucracy. The resulting hires expanded exponentially and a two person office soon became a 10-person soon. The costs borne of such expansions resulted in lowering of the margins and the doctors had to work harder to maintain their revenues to keep their “offices” open. Eventually the income stream grew smaller and the doctors had to get bank loans to stay operational due to delays in payments by the bureaucracy.

Hospitals were called out by whistle-blowers for their engineering of the code-billing techniques and some hospitals had to pay back the government in millions of unjustified reimbursed claims considered “outliers” by the government. The coding and billing clerks were being taught to spot any "fraudulent-billing" procedures and report to the government in hopes of procuring the 30% reward and a trail of doctors saw themselves march in handcuffs towards incarceration. Billing for services became more than a "cross the t and dot the i." It became a sport for the prosecutors to indict physicians for errors and mistakes and have them accept responsibility through consent so the prosecutors could enjoy the satisfaction of successful prosecution and a climb up on the rungs of their proverbial ladder of success.

The Public Mismanagement Begins:
The private mismanagement had just about come to a close. The doctors started closing practices, unable to make the payroll and hospitals had to cut staff and go lean and try to survive the stringent dogmas of the public sector.

As the new century rolled in, it brought with it the public management to curtail the excesses of the private mismanagement in medicine. EMRs were mandated by the government, pseudo-quality measures through PCORI and PQRS were initiated. Meanwhile, the hospitals took the mantle first and exploited the coding mechanisms to increase their reimbursement rates.

Where could these experts with little or no medical care experience go to stop the bleed of tax payer dollars that had reached 17.9% of GDP and constituted 1/6th the economy? The problems all agreed was the “doctor.” It was he or she who provided all the care, therefore logically controlling his or her actions would limit the expenditure too, the experts figured.

The Middle Manager Bonanza

Suddenly “peer reviewed journals” with “high impact values” started printing the need for austerity in healthcare. The dictum changed from “Do” to prevent disease to “Don’t do” to prevent harm. The paradigm was turned upside down virtually overnight. The acronymically based Societies in Medicine started the “Choosing Wisely” program. But they did not seem to tell that to the lawyers who were still sharpening their pens to bring their grief to the courts. This scenario continues to ripen as we speak.

Now for a little digression, allow me to use the economic debacles that have occurred as metaphors to what has been happening in medicine. There is virtually no difference…

The Great Depression:
The 1929 was a privateer’s boom year with asset bubbles growing at an astronomical rate. Seeing the prices skyrocket,  a change in public policy resulted in the Balance Sheet Problem with the bubble bursting on the nation. The Great Depression started and one year’s U.S. GDP was wiped clean. Unemployment reached 25% nationally and in some sectors it was as high as 50%. Photographs are a great reminder of that calamity.

When the screw of economy stops turning...

If not for WWII the depression would have continued longer. But the WWII caused a massive public spending campaign to build armaments and incur public debt with war bonds to ease the disaster. The heady days of the '50s and '60s were as a result of the belt-tightening in the '30s and '40s and the boom in public spending, private saving and risk taking by new enterprises.

And then starts turning again.

The Housing Bubble and the Global Financial Crisis:
Leaving aside the tech bubble of 2000, the 2008 housing bubble started when speculators were claiming there was no more land available for building homes and thus existing houses were priced at well above what median income could afford. People went into a buying spree and “flipped” for the sport of making money. The housing bubble started a Global Financial Crisis that brought the world to its knees. Some countries like Greece continue to flounder while Ireland and Iceland have picked up growth once again and righted their respective ships. This housing bubble was not all privateer’s doing, the government had a part to play in it too. The well-meaning politicians encouraged everyone to take a loan with “cheap money” so everyone could afford a “picket-fenced home.” Ah the glory of the progressive thought was the call of the day.

As realization dawned, the bubble burst and privateers could no longer afford to pay for their homes due to collapse of the home prices. Foreclosures and bankruptcies rose. The banks had collateralized the loans CDOs, CLOs and the CDSs were created and existing loans were converted into Mortgage Backed Securities by mixing high and low risk combinations in tranches and no one knew who held the loan in the end. Inside the crusty baked pie was a major uncooked ingredient!

This started Mortgage Holding Companies to vanish into bankruptcy overnight. Fannie May and Freddie Mac, the two government sponsored mortgage entities suffered huge losses that needed bail outs from tax payer dollars.

The Pain of Deleveraging:
The past eight years have been spent in deleveraging by the private companies that gambled in excesses and lost huge capitals for their clients, an example of the Insurance Company with excess weighted CDSs was AIG that also required a government bail out to stabilize its balance sheet and slowly deleverage the excesses. This cost the tax payers $134.35 Billion. The AIG Bailout (in billions)
Fed Reserve Credit Facility (~$60B) $43.458
Fed Reserve Securities Purchase(II)$19.8
Fed Reserve Securities Purchase(III)$29.6
Treasury Preferred Stock Investment$40
Treasury Credit Line (Max $30B)$1.5

Deleveraging is indeed painful. Both the private citizen and Corporations save to get rid of debt. As they do, the wheels of borrowing, investment, and entrepreneurship suffer. Commerce stagnates, unemployment rises, wages stagnate, Treasury Bonds stay low and GDP gets stifled. The “Quantitative Easing” a FED mechanism of printing money to keep liquidity in the marketplace and also to absorb the bad mortgages off the balance sheets of the private firms allowed the ball to keep rolling, seems to have muddled the economy onto firmer grounds recently even though we are not out of the woods yet. Meanwhile the FED Balance Sheet bloats further...

 Talk of austerity at this juncture would create the Hashimoto debacle that crushed the Japanese recovering economy and pushed back several years into 2 decades of deflationary spiral.
The Japanese ended up losing 3 years of their GNP. Yet without consideration to history, the Hashimoto Principle of “Austerity and Taxation” that extended the 1985 Japanese Balance Sheet Problem into two lost decades and because of FDR/Hoover's desire not to allow the debt increase through austerity in spending, pushed the recession further in time, which is now being swiftly applied to the Healthcare industry's Balance Sheet problem, especially to its most important components; the physicians. The Austrian School seems hell bent at just about the wrong time. 

Austerity comes to Medicine:
In medicine the austerity principle of not doing things that may be deemed necessary under the guise of “Choosing Wisely” and some other diktats are being laid down as dogmas. The problem of invoking such policies in medical care is, ultimately the patient suffers when the doctor’s hands are tied. The experts remain double blinded in their thinking, cost in medicine is not going up due to payments to physicians as they envision, as the recent “Medicare Data Dump” clearly showed that out of $1 Trillion expensed by Medicare in 2012 only $77 Billion was paid out to the physicians or 7.7% but by the excesses of the intermediaries; the Hospitals, Pharmaceutical Companies, Medical Device Companies and other armchair administrative types who are given the authority to say yes and no.

The Doctor Data Dump was hypercritical of the physicians but did not take into account all the factors in the healthcare costs.

Austerity principles are good when there is privateer excess and micro-strategies can be employed. It is a public excess of policies and mandates that stifle an enterprise if used unwisely.  Discouraging doctors from practicing the art of medicine on an individual through the lens of population health measures, handcuffing them from their art  is tantamount to control and obfuscation of the reality and hurting the basic principle of…Primum non nocere.

The False Conditionals:
Here is where the story gets even more interesting… The SGR that keeps calling for the 21% cut in physician reimbursements for delivered care, well if one were to add some neurons to this conundrum one would find that cutting 21% off the $77 billion paid as revenue to physician practices will essentially close down the majority if not all the physician practices in the country. Interestingly enough the "SGR fix" is nothing more than a dressed up governmental bureaucracy to help the middling managers to gain a larger share of the healthcare dollars through "Management." The marginalized physicians will gravitate towards the hospitals, who will pick and choose off the litter at bargain basement prices and reel in mega dollars from their expert coding practices. Medicine as we know it will be based on the cheapest and leanest delivery in patient care at the most expense to the tax payer, while keeping the physician in line with threats of pink slips and “there are plenty who will want to fill your shoes,” threats. And everyone will rejoice unless it is them in the hospital bed. It is already happening as 83% of the newly minted physicians climb aboard this "hospitalist" trend and are told what to write on their EMRs in order to maximize returns and minimize expense. The “Private Practice of Medicine” is in a steep decline! The glare will turn towards the real wasteful agencies ultimately, then what?

The Cost of earning a Medical Degree continues to increase, yet the income to payoff the debt continues to decline...

To recognize a structural problem created by private excess requires strategic micro-manipulation. As an example in medicine would be limit the middling managers skimming the top who are providing NO services to the patient care except logistics of where to go and what to do. These intermediaries are not completely unimportant but they do not need the tax payer wealth thrown at their feet in bushels.  The Administrative section in Healthcare has grown nearly 4000% in the past two decades while in 2025 a physician shortage of 125,000 is expected in Primary Care alone as the population continues to grow, aging and disgruntled physicians retire prematurely. If one thinks this far enough one comes to an understanding that there is an imbalance of thought and action and the strategies employed have now created a mega Balance Sheet Problem in Medicine both economically and in physician participation rate. The assets (physicians) are declining and their expertise is being marginalized while the liabilities ( Expensed Costs for all various and sundry items) are increasing.

The private sector in medicine has long been corralled and now the public sector is in full metal gear. The only problem is the over swing to either side that creates larger calamities. In fiscal terms, raising the interest rates to excess stifles demand, while lowered interest rates spur demand for innovation but if low interest rates are left too long that creates hyper- inflation. Maybe some in medicine sitting on the thrones of power might realize this conundrum and can help ease the weighty burdens that are currently squeezing the life-blood out of patient care!

Back in the Medical Staff Lounge:
The air in the medical staff lounge, a four-walled, small decrepit space where even the coffee machine worked only when slapped around a bit, two colleagues; a young recent graduate and a seasoned silver-haired sit looking vacantly at nothing, “so this is medicine?” the young one mutters, his thick coke-bottled glasses perched delicately atop the tip of his nose, “all computer work and little patient interaction?”

“It is. It is…” the older colleague’s words trails off. “A Faustian bargain,” he says almost imperceptibly in his hushed silence to himself.
“What did you say?” the young one asks.
“Nothing, nothing…”