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Health-care costs overall have been rising faster than inflation, but not all medical costs are skyrocketing. In a few pockets of medicine, costs are down while quality is up.
Dr. Brian Bonanni has an unusual medical practice. His office is open Saturdays. He e-mails his patients and gives them his cell-phone number.

“I need to be available 24 hours a day,” he says. “I want to be there when a patient has questions, and I want to be reachable.”

I’ll bet your doctor doesn’t say that. Bonanni knows he has to please his patients, not some insurance company or the government, because he’s paid by his patients. He’s a laser eye surgeon. Insurance rarely covers what he does: reshaping eyes so people can see without glasses.

His patients shop around before coming to him. They ask a question that people relying on insurance don’t ask: “How much will that cost?”

“I can’t get away with not telling the patient how much exactly it’s going to cost,” Bonanni says. “No one would put up with it. And the difference of a hundred dollars sometimes makes their decision for them.”

He has to compete for his patients’ business. One result of that is lower prices. And while the procedure got cheaper, it also got better. Today’s lasers are faster and more precise.

Prices have fallen and quality has risen in other medical fields where most people pay for care themselves, like cosmetic surgery. Consumer power works — even in medicine.

When government and insurance companies are kept away from the transaction, good new things happen.

A doctor in Tennessee I talked to publishes his low prices, such as $40 for an office visit.

Most doctors would say you can’t make money this way. But Dr. Robert Berry told me you can. “Last year, I made about the average of what a primary-care physician makes in this country,” he said.

Berry doesn’t accept insurance. That saves him money because he doesn’t have to hire a staff to process insurance claims, and he never has to fight with companies to get paid.

His mostly uninsured patients save money, too. Unlike doctors trapped in the insurance maze, Berry works with his patients to find ways to save them money.

“It’s coming out of their pockets. And they’re afraid. They don’t know how much it’s going to cost. So I can tell them, ‘OK, you have heartburn. Let’s start out with generic Zantac, which costs around five dollars a month.’” When his patients ask about expensive prescription medicines they see advertised on television, he tells them, “They’re great medicines, but why don’t you try this one first and see if it works?”

Sometimes the $4 pills from Wal-Mart are just as good as the $100 ones.

Speaking of Wal-Mart, medical clinics are popping up in Wal-Mart stores and in other similar markets. The clinics offer people with simple problems like sore throats and ear infections relatively hassle-free care … cheap. Almost everything costs $59 or less. And the clinics are typically open seven days a week.

Grace-Marie Turner, president of the Galen Institute, a health-policy research organization, explains how these clinics thrive: “They’re figuring how to do something faster, better, cheaper! They’re responding to consumer demand because they see that they might make some money on this.”

When consumers pay for medicine themselves, saving insurance for the big things, and doctors deal directly with consumers, doctors begin to compete. They start posting prices and work to keep them low.

And consumers gain more control of their health care. Instead of governments and insurance companies deciding for patients, patients decide.

Competition gives consumers more choices. And choice gives them power. Remember that when you hear a politician promise to make health case accessible and affordable through the force of government.

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Rosa (not her real name) emerges from the Emergency Room (ER) of the Philippine General Hospital (PGH). She hurries past the long queue of charity patients, unmindful of the colorful streamers and posters celebrating PGH’s 100 years of existence.Her husband Virgilio had an accident and she needs to buy his medicine. He has been in pain since they arrived from Parañaque, where the first hospital they had gone to, lacking the proper equipment, referred them to PGH.

At the PGH pharmacy, the medicine Rosa needs – sold at a discount to charity patients – is out of stock, forcing her to buy it at full price elsewhere. At the ER which charges a user fee, Virgilio’s X-ray shows the need for him to undergo surgery. This means more expenses for Rosa since the Operating Room (OR) now charges a fee of P1,500 ($33.10, based on an exchange rate of P45.31 per U.S. dollar). Virgilio, however, is the family’s sole breadwinner. His income as a tricycle driver barely covers the expenses incurred at PGH.

This situation has now become common at PGH, a dismal truth no colorful or glossy streamers and posters can cover.

Case presentation

Infrastructure projects, new equipment, extended services, and a miscellany of activities, like a fund-raising concert and a time capsule, serve as markers for the PGH in commemoration of “100 years of excellence.”

The PGH was established on August 17, 1907 through Act No. 1688 of the Philippine Commission. Construction began in Manila, and the hospital officially opened on September 10, 1910. It underwent numerous reorganizations and emerged in the 1950s as an administratively autonomous unit of the University of the Philippines Manila (UPM) College of Medicine. Accordingly, the PGH became a venue for the learning and practicing of the medical profession by the best and brightest minds, imbuing them with a commitment to serve the underprivileged.

One of them, Honorato Quisumbing, worked at PGH during World War II even after many of his colleagues left the area. He was shot in 1945 by soldiers as he attempted to secure medical supplies for the sick. Another was Johnny Escandor, chief of the research department at PGH, who offered free medical services to poor barrios and indigenous peoples. He was killed in 1983 after going underground to lead the resistance against the Marcos dictatorship.

In light of its history, the importance of the PGH as a provider of affordable, quality health care is well-established. This, however, seems lost in the government’s continued abandonment of the hospital as reflected in the allocation it receives.

Examination

The budget for PGH has been pegged at P1 billion ($22.07 million) since 1993. This, in real terms, can be considered a budget cut, considering that the actual cost of yearly operations has already increased to P3 billion ($66.21 million).

To address the deficit, PGH Director Carmelo Alfiler distributed on December 14, 2006 a memorandum on increased rates without proper consultation with the PGH community. The cost of blue cards from the medical records division was raised from P7 ($0.15) to P15 ($0.33); the use of the OR, previously free to patients, now costs P1,500 ($33.10).

Various sectors criticized the move, and Alfiler deferred the increase in rates pending further discussion. Last March 29, however, the UP Board of Regents (BOR) authorized the collection of OR fees from charity patients, to generate an additional P16 million ($353,122) annually. “Up to 70 percent of patients undergoing charity surgery,” announced the BOR, justifying its decision, “are covered by the Philippine Health Insurance, Inc (PhilHealth).”

Jossel Ebesate, head nurse at PGH and president of the Manila chapter of the All-UP Workers Union, challenged the accuracy of BOR’s defense. “A survey that we conducted showed the opposite. Seventy percent of charity patients do not have PhilHealth coverage. Only 30 percent do.”

Meanwhile, Marikris de Guzman, a councilor of the UPM student council from the party Alternative Students Alliance for Progress–Katipunan ng mga Progresibong Mag-aaral (Association of Progressive Students), said that there is a parallelism between the PGH’s increase in rates and UP’s tuition hike. “In both cases, the institutions suffered from inadequate budget given by the national government. Both resorted to fee increases to offset the deficit, in spite of opposition by their communities. Both are victims of administrations with mistaken priorities.”

Diagnosis

These mistaken priorities are evident as PGH officials tout “self-sufficiency in resources” as a solution to fiscal problems. “‘Self-sufficiency’ is a term often used to conceal financial abandonment by the government,” Dr. Gene Nisperos, secretary-general of the non-government organization Health Alliance for Democracy (Head), said. “Another euphemism is ‘fiscal autonomy.’”

Instead of fighting for greater state subsidy, the PGH has channeled its efforts into increasing its rates. A smokescreen used is “modernization.” New equipment comes with new fees. For instance, after the “modernization” of the Sentro Oftalmologico Jose Rizal, almost everything from cardiac monitors to anesthesia machines had new user fees. “Ironically,” said Ebesate, “after upgrading the Sentro Oftalmologico’s facilities, less patients have been able to make use of them.”

A more glaring irony is that for lack of space, most patients are refused a room in the hospital unless they offer to pay. This shows that at the PGH, “service to the poor” has taken a back seat to revenues.

Prescription

In 2006, as the PGH geared for its centennial celebration, President Gloria Macapagal-Arroyo pledged to release P100 million ($2.21 million) annually to PGH until her term ends in 2010.

“The government should institutionalize the allocation, instead of releasing it based on the President’s whims,” Nisperos said. “The PGH implemented a rates increase knowing that the government can afford a P100-million ($2.21-million) increase, in effect ceding to the government’s abdication of its responsibilities, instead of holding it accountable.”

More than the PGH administration’s apparent lack of political will, the rates increase only abets the growing neglect of social services by the government, to the detriment of disadvantaged Filipinos like Rosa and Virgilio, whose financial status should have made them the primary beneficiaries of accessible health care from PGH.

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Doctors and clinics in three South Florida counties account for most of the billions of dollars charged to Medicare nationwide for HIV and AIDS drugs and services, billing records show.

Federal health care regulators call the lopsided billing patterns “egregious” and warn that South Florida — particularly Broward, Miami-Dade and Palm Beach counties — is a potential hotbed for health care fraud, waste and abuse.

“It”s all ultimately part of the money-driven, underground economy in Miami,” said Benson B. Weintraub, a health care fraud lawyer based in Fort Lauderdale.

According to a report this week by the Inspector General for the U.S. Department of Health and Human Services, health care providers in Broward, Miami-Dade and Palm Beach submitted $2.5 billion in claims to Medicare on behalf of HIV/AIDS patients in 2005.

By contrast, providers in the rest of the country submitted less than $1 billion in claims combined.

Suspected scams, which involve the recruitment of patients, kickbacks and unnecessary medical services, aren”t limited to HIV clinics.

In March, federal inspectors found dozens of wheelchair and electric scooter suppliers in Florida that ran afoul of federal rules, including phantom operations that billed the government but had no bricks-and-mortar locations.

“Medicare continues to be highly vulnerable to fraud and abuse and immediate steps must be taken,” Inspector General Daniel R. Levinson said of his office”s findings.

Mr. Levinson”s report also found that Medicare officials and contractors could not provide a “clinical explanation” for the high level of billing.

One common HIV/AIDS scam involves doctors and clinics employing “runners” who recruit HIV and AIDS patients, then pay kickbacks if patients get unneeded medical treatment. In turn, crooked providers bill Medicare for the services.

After getting shut down, some providers open different clinics under a new corporate name.

In a written response to Mr. Levinson”s report, Herb B. Kuhn, acting deputy administrator for Centers for Medicare and Medicaid Services (CMS), said Medicare officials have taken “aggressive recent actions” to crack down on fraud.

Though provider billings for HIV/AIDS in Southern Florida have increased from $1.5 billion in 2004 to $3.3 billion in 2006, CMS is getting tougher scrutinizing claims before providing reimbursement, Mr. Kuhn wrote.

In 2004, he wrote, Medicare reimbursed 66 percent of all claims and paid out $1 billion. But in 2006, CMS paid $890 million, approving just 27 percent of all claims submitted.

“In fact, many of the providers with aberrant billing activity … were referred to law enforcement and are now facing prosecution,” Mr. Kuhn wrote.

Mr. Weintraub said the federal court in Southern Florida has a reputation among lawyers as “the health care fraud capital of the United States.” He said a host of factors contribute to the problem.

The fraud often happens in disenfranchised communities and sometimes involves “illegal residents because they”re paid cash for virtually no labor, and that in my view is a very degrading and exploitative practice,” Mr. Weintraub said.

Federal authorities said they”re increasing efforts to investigate and prosecute fraud. In April, the FBI and U.S. Attorney”s Office for the Southern District of Florida announced the arrests of 10 owners of HIV clinics and medical-equipment dealers on money-laundering charges.

One company, Coral Way Professional Health Services Inc., was charged with giving kickbacks to patients. At the clinics, workers injected the patients with a saline solution but later billed Medicare for actual prescribed drugs, authorities said.

A federal task force aimed at rooting out Medicare fraud has resulted in 34 criminal cases involving a combined $142 million in Medicare bills in Southern Florida, authorities said.

R. Alexander Acosta, U.S. Attorney for the Southern District of Florida, yesterday called the federal task force “a critical part of our continuing resolve to safeguard the Medicare program.” He said health care prosecutions have increased nearly 50 percent compared with last year.

Investigators are largely focusing on infusion therapy and medical equipment dealing schemes, Jonathan I. Solomon, special agent in charge of the FBI”s Miami field office, said yesterday. Infusion therapy mostly deals with medication given intravenously or through a feeding tube.

HIV/AIDS billing scams have been occurring for years in Southern Florida. In 2005, the state Board of Medicine convened a meeting to discuss the problem.

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