The crazy story of why the fax machine is the way all doctors talk to each other

"The Obama administration spent upward of $30 billion encouraging American hospitals and doctor offices to switch from paper to electronic records. The program was a wild success, in one respect. The number of hospitals using electronic records grew from 9 percent in 2008 to 83 percent in 2015, a huge change in less than a decade. 

But the program didn’t account for a critical need: sharing. Hospital and doctor offices generally remain unable to transfer electronic information to other hospitals and doctor offices. Billions of dollars later, they are left printing out documents and faxing them."

From the article The Fax of Life.

I was wondering how fax machines were doing since Office Space!

The article is a fascinating look at yet another hunk of waste that fills our health care, helping to make the U.S.A.’s health system one of the most expensive on the planet. (I’ve written about another waste, called coding.) You know this particular waste from visiting a new doctor and filling out those endless forms, but let's lay it out:

1. You enter your patient information on one of their faded clipboard forms

2. Someone in the office types what you wrote into a computer 

3. When another provider requests your info, they print it out and fax it

4. The other provider enters that info into their computer by hand — or with a "fax reader"

Expensive to retype all that? You bet. But even worse, I'd suggest, is that I count at least three chances for something to be entered wrong. If there's even a slight chance of entering any particular piece of information wrong, the sheer amount of data to be entered and the times it must be re-entered means the likelihood of something on your medical record being incorrect is pretty darn high. I'd say it's nearly certain. Hopefully it's not something critical. 

This is how you can have a health care system like ours that is both more expensive AND worse than almost any other industrialized nation. Or, as my CFO Ron Maurer might put it, "You can get better health care, but you can’t get more expensive."

Pricing madness in health care, the worst run industry in America

 

I've written about how health care providers have two sets of books. There's one book with the prices for insured patients. And there's a second book with prices for uninsured patients.

I was wrong about that. Heath care providers don't have two sets of books. They have dozens. They set different prices for all kinds of different customers: insurance company A, insurance company B, Medicare, Medicaid, uninsured patients and so on. On top of that they have so many different prices for so many different procedures that no one can keep track of them all unless they're a billing specialist.

This has led to a couple bizarre outcomes. One is that there is a particular job for an expert billing specialist. It's called a coder. The entire job of a coder is to translate the procedure a doctor did into a code used to bill the insurance company. It is a full time job for thousands of people. People with this job get paid enough to own a house and raise a child. (I know this because my niece has this job.) Can you imagine another industry where this kind of cost waste would be allowed to exist? Can you imagine Apple hiring thousands of people who, after you ordered and received an iPhone, sat at home and checked the code on your order—only the code, not whether you ordered the correct phone, not whether it worked well, not whether you liked it, not anything at all other than making sure the correct code was billed? It's like a scene from Brazil, except it's real and it's how we run what's arguably one of the most important industries in our country.

Another outcome from this pricing madness is that there is no way for you and I to find out how much a medical procedure costs until we get the bill. You can't find out beforehand. Try it, ask someone. The nurse won't know, the doctor won't know, the administrator who charges your co-pay won't know, your insurance company won't know. Even my niece won't know; coders only know codes, not costs, and they're not on any Contact Us list anyway. None of these people will even know who to call to find out—I've tried, I've asked. So who knows? Actually, I have no idea, I've never figured it out. There's no other business I can think of where you can't find out what something costs before you buy it.

More reading on the terrifying inscrutability of American healthcare pricing:

My dog's healthcare is better than mine.

That gall bladder surgery could cost you $41,000. Or maybe $90,000. Hard to say.

The U.S. leads the world in health care expenditures (but not results).

The Worst Run Industry In America is my look at the American health care industry, its service, prices and promises, from my view as a merchant.

What did we expect? The not-very-shocking failures of healthcare.gov

So healthcare.gov's launch was a customer service disaster. As a merchant, I'm less surprised by it's failure than the fact that people are surprised it's a failure. The theater of mock astonishment that the media have acted out in the last month has reminded me of the scene in Casablanca when Captain Renault comes into Rick's gambling hall—where he had been gambling himself, the day before—to declare, "I'm shocked—shocked!—to find that gambling is going on in here." 

Think about your experience with healthcare and government websites. Have you ever dealt with any doctor through their website? How many times have you seen your health records as an electronic file? Ever looked up your itemized insurance bill online? How about the federal government—ever filled out your taxes at irs.gov? When is the last time you checked the balance in your account at socialsecurity.com? Arranged to ship a package at usps.com?

Doctors, insurance companies and most parts of the federal government live in a nearly a web-free world. They don't use the internet for much of anything, let alone working with customers. Why is it a surprise that when they had to build a consumer website it failed? Why is anyone shocked—shocked!—to find that healthcare.gov is a pile of crap?

Even if the contractors were brilliant, and I don't doubt many were, the deck was stacked against them. I've read what the site must do and it's very complex. Take the act of verifying that a person is who they say they are, a central part of determining their eligibility for aid. If you're like me, there have been plenty of times you've had trouble logging into a website that you've already logged into before. Now imagine that the website has to find out who you are before it can log you in for the first time. Then imagine the website contains 350 million people like you in the database. Then imagine the database doesn't really exist, it's a compilation of multiple databases. That's healthcare.gov.

Apple spoiled us. Before them software always broke. (It's worth reading this amazing piece, though, to see how broke the iPhone was just a week before Steve Jobs made his groundbreaking presentation.) All this isn't to say that healthcare.gov shouldn't work—it should. And because it was always going to have launch trouble they should have had a Plan B and Plan C ready to go. Backups to help the roll-out, like a longer period between launch and required sign-up, local sign-up offices for in-person guidance, and more advertising that customers can sign up on the phone. But all that aside, it's just good to remember that making software work correctly is hard. It's not shocking when it fails.

The Worst Run Industry In America is my look at the American health care industry, its service, prices and promises, from my view as a merchant.

Don't break the wrong part of yourself.

In America we insure parts of our bodies separately. Eyes are covered by optical insurance. Mouths are covered by dental insurance. The rest is covered by "health" insurance.

In other words if you fall and break your nose and teeth and you have no dental insurance, only health insurance — a pretty common situation in America where dental insurance is considered a "luxury" — the doctor would fix your nose but not your mouth.

"Sorry, I know they're both located on the same appendage an inch from each other but you didn't have coverage for one of them. Good luck with the eating." 

How did this come to be? Why are our eyes and mouth treated differently from the rest of us by insurance companies? How did these parts of our bodies get carved off, so to speak, from the rest of medicine? They're crucial to our overall health, our body is one unit, why are they insured separately?

Imagine different car companies insured different parts of your car. You got in an accident and had to go to the fender insurance company to file a claim to fix your fender and the bumper insurance company to file a claim to fix the bumper. It would seem absurd. Surely someone would come along and offer to insure the whole thing to make it simpler for car owners.

Surely, someone, right?

The Worst Run Industry In America is my look at the American health care industry, its service, prices and promises, from my view as a merchant.

Doctors have two sets of books

I went to a doctor in Brooklyn this week. Since my insurance is sold to Zingerman's in Michigan I can't use it for a regular doctor visit here; the insurance doesn't work out of state. More about how that's a bad idea another time. This time I'd like to talk about prices.

Most of the time doctors are opaque about what things cost. You don't know what costs what, you aren't presented options, you may never see a bill. Not at this doctor. I was told right up front how much my visit would cost. They took my credit card when I handed in my paperwork. Before I was given a shot the doctor said it would cost an extra $25 and was that OK. ("Sounds cheap, let's have two!") This kind of this-is-what-it-costs-will-you-pay is common courtesy in the retail world but I've never had it happen with a doctor so I was kind of shocked.

I went to check out. They gave me the bill. It was laid out in a matrix, like a spreadsheet. There were three rows and three columns:

New patient  visit		$250.00	$150.00
Injection		$112.20	$25.00
Total		$362.20	$175.00

 I was confused. "What's going on with the different prices?" I asked?

The clerk answered matter of factly, "Oh, the first column of numbers are what we would charge if you had insurance. The second are what we charge you if you don't."

In other words, if I had used insurance the procedures would have cost $362.20, twice as much as the $175 I paid. They would have been the same procedures. They would have lasted the identical amount of time. They would have had the same result. So it appears that the identical product, given to the same person, has two vastly different prices depending solely on how they choose to pay. Of course we're all used to price discrimination from airlines based on when we want to travel. But this is isn't a case of priced scheduling. It's priced paying. Gas stations sometimes charge a few cents more for paying credit card instead of cash but never anything like this. If I had stopped the clerk at this point and said, "Oh, I'm sorry, I DO have insurance!" they would have said, "Great!" and promptly charged me double.

This may seem strange to the rest of us humans. But I learned it's actually normal in health care. "Normal," that is, for the worst run industry in America. There's a simple — and ridiculous, I assure you — explanation for it. I'll write about it soon.

The Worst Run Industry In America is my look at the American health care industry, its service, prices and promises, from my view as a merchant.

How not to price a product

Our partners group held its annual retreat last week. One of the topics we discussed was health care costs. A little background first: each year Zingerman's benefits committee solicits bids from insurance companies and creates a proposal document to help us understand the menu of costs and changes. It's not typical for us to talk about the proposal at the retreat but this year we had a few more changes than usual.

It took an hour. To say that people were mildly baffled is an understatement. It was a clusterfuck. It's not that things cost different amounts—that part makes sense. It's that each insurance company offers so many different options that cover so many different contingencies you need a degree in Kafka to understand how to read the bid. Explaining it is an exercise in invented language; the health care industry has so much jargon you need a glossary to understand what they're saying.

Yet a one hour meeting explaining a financial bid to seventeen experienced partners is nothing like what happens when we have to share the costs to our crew. That meeting takes two hours—per employee. We have dozens of those meetings during the enrollment period, which for some reason that's never been explained reasonably to me, only happens once a year. (That's right folks. You have the privelege of buying health insurance at most American businesses just once a year.)

Imagine if we had to sell sandwiches this way. Imagine we had to have meetings with our customers that took an hour to explain how to buy a sandwich. Imagine we had two dozen different pricing schemes per sandwich. Imagine we only let customers get in on the sandwich buying action once per year. Imagine any other industry where service remotely this bad is inflicted upon its customers.

The Worst Run Industry In America is my look at the American health care industry, its service, prices and promises, from my view as a merchant

The postal system versus the medical system, which is worse?

There are plenty of worries about unknowns arising from the Affordable Care Act (AKA Obamacare). One that I’ve heard is that government intervention will turn the medical system into the postal system.

Forget about the fact that the premise is wrong—private health insurance companies will still pay private doctors, there won't be any government in the waiting room. But perhaps some aspects of the postal system wouldn’t be all that bad. I’d like to take a bleak moment to defend the postal system, at least with respect to the health industry. My examples aren't meant to line up apples to apples—delivering mail and delivering medicine are very different. I write these posts on what I think is the worst run industry in America from a merchant's perspective, trying to look at the problem health care has with its customers, not with its science. I don't think the post office is a beacon of great service so this defense won’t last long. But they do some things well and, in my opinion, a lot more than the health care industry does.

A recent example. I had to get my daughter’s first passport. I went to the passport website, downloaded a form that explained exactly how to go about it, then went to the post office without an appointment. I waited a short time for someone to review all the documents. They told me how much everything would cost and told me when it would arrive (it beat their arrival estimate). I was done in less than twenty minutes. Could any one of those things have happened with a doctor? Well, I’m sure they could. But for me they almost never do. Doctors don’t provide instructions on websites, don’t work without appointments, don’t tell you what anything costs, and I’ve yet to have a visit last fewer than half an hour, even though I only get to talk to the doctor for a couple minutes. Put the two next to each other like that and the post office comes out looking pretty good.

Here's another. The post office delivers—nearly every day, with remarkable accuracy. When’s the last time you mailed a letter and it went to the wrong place? (I can tell you it happens almost a half a percent of the time in the private sector. That’s the number of mis-ship complaints we get about UPS at Zingerman’s. That doesn’t sound like much but I bet it’s a hundred times more than the postal service.)

But I digress. I don't know how accurate medicine is and that's not the point. I'm asking about delivery. Does the health care industry deliver doctors to your home? Why not? Doctors used to make house calls, after all. Wouldn’t it be better for patients—especially the elderly—if they still did? We don’t even ask health care this question any more because we think delivered modern medical service is impossible. It’s not. Virtually everything else we purchase offers home delivery. Why not medicine?

The health industry is often lauded for its innovations in technology, surgery and drugs. Why don't they spend any time innovating on service?

The Worst Run Industry in America No. 1: Your best customers are your worst customers

Last week I sat down with two people who are leaders in a relatively large Michigan health insurance company. (I won't use their names or the company name.) They sought me out because they were redesigning their website and they liked the one I direct at Zingerman's. They appreciated that it was fun and likeable. They wanted to know the philosophy behind the design to see what they could learn from it.

I told them that the fun and likeable parts of our website are not there because we think it's cool and nice to have. They're not a veneer. They're there to solve a customer problem. The problem is that most people find expensive food they've never heard of kind of intimidating. Our job is to remove that obstacle. We make the food approachable with information, humor and cartoons. My advice to them was to find their customer's problems and solve them on their website. Boiled down, that's essentially my philosophy of website design.

Like most of you I've been a student of health care since the minute I had something serious happen to my health as an adult. It happens to all of us. We start paying attention to health care when we really need health care. If you're like me, what you found when you started to use health care in America was inspiring, terrifying and baffling. On the one hand health care professionals and their gizmos and drugs do a pretty good job of making us well. But the health care industry that they work in is, bar none, the worst run industry I've ever experienced. (I used to reserve that line for the airline industry. But health care is run so atrociously it's not even a contest anymore.) When I say it's the worst run I'm not talking about profits and income statements. A lot of health care is profitable. It's everything else that the health industry does that makes it horribly run.

I think there's a lot that health care can learn from American retailers, who, in my admittedly limited travels in the world, can be the most forward-thinking and creative service companies anywhere. We retailers can also learn from health care. Mainly, we can learn what not to do. Because sometimes we're doing the same things to our customers that the health care industry is doing and we don't even know it. To that end, today I'm beginning a blog series I'll call The Worst Run Industry in America. It's not meant to be a venting session. My intention is to share lessons on what not to do from the industry that seems to figure out all the wrong ways to help people.

As my conversation wrapped up with the health care leaders they said something so shocking I can't shake it. We talked about different ways they could give great service to their insurance customers. At one point one of them said, "You know, there's a problem here. If we give service that's too good then what happens is we attract the really needy patients, the ones who need lots of health care. These customers are bad for our bottom line." 

In other words, their best customers — the ones that need them the most — they consider their worst customers, the ones they don't want. It made my jaw drop. No retailer could ever survive if it felt like that. My hope is that, in time, no health care insurance company will survive that thinks like that either.