March 29, 2009

Centurion To Select Arbitrator For NAFTA Proceedings

















ARBITRATOR APPOINTMENT

We are in the beginning process of selecting arbitrators for our NAFTA proceedings. Under NAFTA articles the parties can choose their own arbitrators. Under Article 3 of the UNCITRAL Arbitration Rules, arbitration proceedings are initiated when the claimant gives the respondent a notice of arbitration. Which has already been submitted to the Government of Canada. This notice can include a proposal for the appointment of an arbitrator, a “notification of the appointment of an arbitrator,” and a statement of claim. An arbitrator can be appointed at any time from the delivery of the notification of arbitration, which was also done by us last week. A proposal for selection of arbitrators was submitted by the Government of Canada we agreed with all of the deal points instead of one. However it is a major one it’s the issue of the newly appointed Secretary General of the International Centre for Settlement of Investment Disputes (ICSID) Meg Kinnear.


Meg Kinnear Elected ICSID Secretary-General Ms. Kinnear was counsel for the Government of Canada in these proceedings before she took her post to become Secretary General at the ICSID. The reason this is important to me besides the obvious conflict. Is the amount of authority the Secretary General has over the dispute resolution process. The Secretary-General of ICSID, is the appointing authority for arbitrations under NAFTA's investment disputes.Under Article 1123, Chapter 11 disputes are presided over by a tribunal of three arbitrators unless the parties to a dispute agree otherwise. Each party may pick one arbitrator; the third arbitrator is the presiding arbitrator and is to be appointed by the agreement of the parties. The specific mechanics of actual appointment of a person as arbitrator are governed by the rules under which the claim is made, unless the parties have agreed to some other procedure. Under the ICSID Convention, the procedures for appointing arbitrators are governed in a large part not by the Convention, but instead by the ICSID Procedure Rules established by the Administrative Council under the authority given to it by Article 6 of the ICSID Convention. In large part, the Additional Facility Rules combine the elements of the ICSID Convention and the ICSID Procedure Rules into one document. In most instances, the rules under the ICSID Convention and the Additional Facility Rules are the same. So what happens if both parties cannot agree on the third arbitrator? You guessed it one party may request the Secretary General to step in.

Appointment by the Secretary-General

Article 1124 of the NAFTA establishes a system by which the Secretary-General of the ICSID may appoint one or more of the arbitrators for a dispute, on application by one or more of the parties to the dispute. This system exists to prevent an intransigent party from holding the process hostage to its refusal to appoint an arbitrator. Such provisions exist in the ICSID Rules and UNCITRAL Arbitration Rules as well.

Here is something else I need to be on the look out for accordingly, in any NAFTA Chapter 11 arbitration that does not come under the tent of the ICSID Convention, there remains, as in any other interna­tional arbitration, the risk that a domestic court, ex­ercising its power to register a NAFTA award, might purport to vacate or refuse to enforce the award.  The key procedural advantages that  ICSID Convention arbitration has namely, nonappealability pursuant to Article 54, under which any ICSID Convention award is tantamount to a final, nonappealable money judgment in each ICSID Contracting State. From an investor’s perspective, it prevents (or at least should prevent) the host state from nullifying an adverse award through action in its own courts. NAFTA also explicitly grants parties the freedom to select their arbitral locale.  Absent such a choice, pursuant to both the ICSID Additional Facil­ity Rules and the UNCITRAL Rules,18 the choice is left to the arbitrators, the only restriction being that the arbitration must take place “in the territory of a Party.” Also NAFTA’s does not expressly require that arbitration take place in a “neutral” forum unconnected with either of the parties. So jurisdiction becomes important as well. So these issues need to be addressed as we move forward to arbitration. Check back later for an update.

March 22, 2009

Canada's Hippocratic Oath And NAFTA








Canada claimed protectionism in the US stimulus bill. But Canada is a hypocrite when it comes to protectionism in their health care system. 

By Melvin J. Howard

Upon meeting with The Government of Canada Foreign Affairs and International Trade office. I have decided that we will proceed with the Arbitration process under NAFTA Chapter 11. There were a number of factors on why I chose to proceed not to mention that we have a strong case against the Canadian government. But I also want to expose the inside secrete barriers that Canada puts up for American health care providers. So knowing this I have made this trade dispute like a military operation where precision and timing are crucial. You have to know what motivates the other side. It would be inaccurate to say that the Government of Canada and its entities are not also motivated by financial objectives to some extent. But when a foreign state entity is involved in a dispute with a private commercial enterprise, commercial considerations typically are not its primary interest. Governments have no shareholders. Their actions are more often influenced by national public policies, economic development goals, political objectives, lobbyists, nongovernmental organizations, multilateral institutional lending requirements, world trade issues, regional public policy, media reaction inside and outside of the country, and other such factors. This must be understood when entering into talks so knowing all of this you begin to form your strategy. And if there is an election going on that was the case in Canada all of these issues are exacerbated.

Now given Canada has enormous power over the operations of foreign investments within their borders. To maximize the prospects for a successful negotiation of a dispute arising out of a foreign investment. I should be aware of the following, know thy enemy I am talking in military terminology of course. Non-the less you should have a very thorough understanding of the sector you are targeting. I have a wealth of knowledge of the Canadian health care system how it is financed and the politics involved.

It is also vital to understand the law governing the entity's activities. With this information, I can determine whether the entity is legally, financially, and logistically independent from the state. This means understanding the "supervisory" relationships between those who run the entity and those who run the state itself. In this regards I am talking about individual Canadian Health Authorities. If the contracting entity is not independent from the state, it may be more productive to negotiate directly with the people who run the state-i.e., the officials who are most likely have the final say on a possible settlement.

You must also understand the relationship between a host state and a private investor, from the host government's point of view, is not simply commercial. Now the Government of Canada has informed me that they will vigorously defend themselves against my claim. That is a standard reaction to most claims or lawsuits where the other party is the defendant you can’t blame them for using it. They also say things like this case has no merit is should be dismissed I never pay attention to those comments Instead I want to learn what makes the government of Canada tick. So I have acquired a sophisticated appreciation of the macro-political, economic and policy issues that are likely to condition the government's negotiating stance. I have to investigate the legislative, executive or other approvals that must be obtained for a settlement to take place.

After assessing that good faith negotiations will not be taking place as per Article 1118 of NAFTA. It is time to move to a formal arbitration as mentioned. Making the trip was against my better judgment but in the spirit of the Article 1118. I wanted to give the Government of Canada the benefit of the doubt now all bets are off. Based on the number of NAFTA cases that were ever settled per Article 1118 the answer is nil I knew this going in. In my opinion Article 1118 is of no value to the investor. You have your lawyer fly into the host country on your dime he would come back empty handed. Basically it’s a PR move for the host country. All it did was delay the inevitable arbitration.

Complaining to Canada’s local Provincial authorities can be like complaining to a self-regulating organization that can pass and amend its own enabling legislation and is run by the very entity that the complaint is about. But investors who have enough money to get the attention of a foreign country also have enough sense, generally, to anticipate these problems. Smart investors are reluctant to invest in capital importing countries, and, when they do, they expect a return commensurate with the risk. The problem is easily stated. The investor wants protection and the foreign government wants capital. The solution that has developed has two components, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the "Convention") and a Bilateral Investment Treaty. Bilateral Investment Treaties ( BITs ) are intended to protect investments and to provide for arbitration in the event of an investment dispute. The Convention provides the mechanism for arbitration of investment disputes and the means of enforcing arbitral awards.

Canada for all its hoopla over protectionism in the US stimulus package. Have yet to  level the playing field when it comes to fair treatment for US investors in health care ventures. Canada needs to send a clear and positive message to US foreign investors in health care we are playing by signed trade agreements. They should clearly outline what is deemed an acceptable investment and under what criteria. Must move to address the uncertainty clouding the Canada Health Act, particularly with regard to foreign US investments. Not introduce any new walls or barriers to legitimate foreign investment in the health care sector. Canada needs uphold their commitments in word and in practice to

welcome market-driven foreign investment by not regulating in a manner that discriminates against or impedes US investments in health care as in our case.

Canada Ratify The ICSID Convention Already!

NAFTA included unprecedented guarantees to protect the value of investments and even the rights of corporations to earn profits in the future, arising out of changes in government regulations or policy. In particular, NAFTA created specific clauses that provide for compensation for lost investments and loss of future profits because of regulations that are “tantamount to expropriation.” NAFTA essentially represented an ironclad commitment on the part of the Mexican and Canadian governments to a development strategy hinging on attracting foreign investment by harmonizing investment deregulation with standards in the US. NAFTA Chapter 11 also gives investors the right to take investment disputes with NAFTA member states to arbitral tribunals rather than to domestic courts of law. The process it established was meant to be used; it was designed to give investors faster due process, As it often is with government--let alone multi-government--intentions, it hasn’t worked out that way. As I was so gently reminded by the head representative at my meeting with Canada’s foreign affairs office. This process can take an average, of almost three years from the beginning of the case to the Final Award on Merits. This is approximately three times longer than NAFTA timetables suggest and two to three times as long as the World Trade Organization (WTO) Understanding on the Rules and Procedures Governing the Settlement of Disputes.

NAFTA investor-state cases proceed very slowly and are very costly. They proceed much more slowly than NAFTA Binational Panel review under Chapter 19, than NAFTA state-to-state dispute settlement under Chapter 20 and state-to-state dispute settlement under the WTO. The main advantage of conducting arbitration under the ICSID Convention is that it contains its own review and enforcement mechanisms. Awards issued under the ICSID Convention are binding on the parties and not subject to review except as provided for under the ICSID Convention. Decisions rendered under an  ICSID arbitration are effectively final. An administrative “appeal” may be made to the ICSID Secretary-General for an annulment of award but only on one of five narrow enumerated grounds: that the tribunal wasn’t properly constituted; that the tribunal has manifestly exceeded its powers; that there was corruption on the part of a member of the tribunal; that there has been a serious departure from a fundamental rule of procedure; or that the award has failed to state the reasons on which it’s based.

 Awards can’t be challenged outside of ICSID, and national courts have no power to review an ICSID Convention award. Parties to the ICSID Convention are bound to recognize the award as binding and to enforce it as if it were a final judgment of a national court.

 It’s telling that the Canadian government hasn’t yet indicated a timetable for ratification of the treaty. Only four provinces and one territory have passed similar implementing legislation: Ontario, British Columbia, Newfoundland and Labrador, Saskatchewan and Nunavut. With its announcement of the passing of the act, the government issued an “invitation” to the provinces to adopt implementing legislation. What’s taking so long is Canada dragging its’ feet? Once Canada ratifies it, foreign investors in Canada will be able to use the dispute resolution mechanisms under the ICSID Convention via investment treaties or investment contracts. Jurisdiction of the ICSID Convention is limited to those instances where a foreign investor’s home state and the host state where the investment is made are both ICSID member countries.

The investment dispute settlement provisions of NAFTA Chapter 11 generally provide that disputes between investors and the host government may be resolved through arbitration under the ICSID Convention. But until Canada’s ratification, recourse must be made to the less defined, more-circuitous Additional Facility Rules of ICSID or the ad hoc United Nations Commission on International Trade Law Rules. Among the parties to NAFTA, only the US has ratified the ICSID Convention, meaning that, until Canada’s ultimate ratification, NAFTA Chapter 11 arbitration under the ICSID Convention remains unavailable to both Canadian investors in the US and American investors in Canada. I wonder why it is taking so long for Canada to get this ratified I do have my thoughts on that but I will not voice them here. Just read between the lines and you can get a sense on where my thoughts are about that. As of now, I am as well as other  US investors left with a time-consuming process. Any investor would readily admit that time is money, and the Government of Canada recognizes this. As was mentioned a number of times in my meeting as to say. Wow this is really going to take a long time you should just give up and quit. Like Beyounce says you must don’t know about me. I am in this for the long haul. 

I am pursuing this case not only to establish precedent I want to collect damages owed as a result of Canada’s alleged breach, damages that could approach USD 160 Million Dollars plus. I am sure the Government of Canada is likely to rely on this imbalance to prolong the process, increase costs so they can thwart justice.

In the hopes as a business decision, I will simply give up in the face of unending delays and mounting expenses. Hello Canada it’s not going to happen. This is why the Government of Canada is so in a hurry for me to appoint legal counsel so I can start racking up costs and start the delaying process. I know that game and decided not to play it. No doubt I will be appointing legal counsel but their job is going to be collecting the money that’s owed to me. To be sure I have just added clauses to my Trusts that if I become incapacitated for whatever reason. The estate is to proceed with these NAFTA proceedings. In essence I have now made it a responsibility of the insurance companies to collect damages. In addition I have invited all independent US surgical facilities to join in my NAFTA claim. Of which several have already signed on. It is clear Canada has a private health care sector they cannot claim otherwise here is a partial list:

SCANNING

Canada Diagnostic Centres, Vancouver (MRI, CT) http://www.canadadiagnostic.com

Canadian Health Scan, Abbotsford (CT) http://www.canadianhealthscan.ca

CML Healthcare, Burnaby (MRI) http://www.cmldiagnostics.com

CML Healthcare, Victoria (MRI) http://www.cmldiagnostics.com

Comox Valley MRI, Courtenay http://www.comoxvalleymri.com

Fraser Valley MRI Clinic, Abbotsford http://www.fraservalleymri.com

Image One MRI Clinic, Kelowna http://www.imageonemri.ca

Okanagan Health MRI Clinic, Kelowna http://www.okanaganhealthmri.ca

Specialty MRI Clinics, Vancouver http://www.specialtymri.com

Vancouver PETscan Centre http://www.petscan.ca

Private surgery centres (excluding cosmetic)

Ambulatory Surgical Centre Vancouver http://www.asc-vancouver.ca

Cambie Surgery Centre, Vancouver http://www.csc-surgery.com

Comox Valley Surgical Centre, Cumberland http://www.comoxvalleysurgical.com

Delbrook Surgical Centre, North Vancouver http://www.delbrooksurgical.com

False Creek Surgical Centre, Vancouver http://www.nationalsurgery.com

Kamloops Surgical Centre, Kamloops http://www.kamloopssurgery.com

McCallum Surgical Centre,Langley

New Westminster Surgical Centre, New Westminster http://www.surgicalcentres.com

Okanagan Health Surgical Centre, Kelowna http://www.gocosmetic.com

American providers want equal access like Canadian providers have already in the US without barriers. I will advocate and call on US representatives to bring this issue to the forefront.

Footnote

The UNCITRAL Arbitration Rules were adopted in 1976 by the United Nations Commission on International Trade Law (UNCITRAL). They were adopted by the United Nations General Assembly on December 15, 1976. Unlike the ICSID, the UNCITRAL is not an arbitral institution; the UNCITRAL Rules are used in ad hoc arbitrations.

What I think is so ironic is that the Administrative Council of the International Centre for Settlement of Investment Disputes (ICSID) elected Ms. Meg Kinnear, a Canadian national, as the new Secretary-General of ICSID. Ms. Kinnear had been General Counsel (Senior General Counsel from 2006) and Director General of the Trade Law Bureau of Canada, a joint legal unit of the Departments of Justice and of Foreign Affairs and International Trade of Canada. http://www.worldbank.org/icsid/constate/constate.htm. She was the lawyer representing Canada in my trade dispute before she left for that post. Canada is the only OECD country that has not yet signed the ICSID Convention 143 States have ratified the Convention.

These arbitrations are subject to the same review and enforcement procedures as ordinary international commercial arbitrations under the New York Convention.  However, even contract clauses containing a submission to the ICSID (Additional Facility) must be treated with special care. Canada goes on to compare the ad hoc nature of the tribunals to the standing dispute resolution system of the WTO. Canada argues that the arbitration be given a low level of deference using the 'pragmatic and functional approach and the court should review awards on the 'correctness' standard. The tribunals are set up for commercial arbitrations not for treaty interpretation. I find this so hypocritical since Canada signed NAFTA knowing that disputes would be resolved through international commercial arbitration panels. But hypocritical has been one of my main focal points of our claim so I am not surprised.

 

 

 

 

March 15, 2009

It's Going To Take Beautiful Minds To Reform Health Care















Health care reform the perfect storm has come

 By Melvin J. Howard

Health care costs are high, and rising even higher. The United States spent about $2.1 trillion on health care. Health costs is a strain American businesses, which directly finance about one-fourth of health spending. Employer-sponsored health insurance premiums rose by 98 percent between 2000 and 2007—four times faster than cumulative wage increases. The average cost of a family, employer-based insurance policy in 2007 was $12,105, nearly the full-year, full-time earnings of a minimum wage job. In addition to high premiums, people are paying higher amounts for deductibles and service use. Americans are spending more than 10 percent of their income on premiums and cost-sharing. This has a profound impact on seniors: the typical couple may have to save nearly $300,000 to pay for health costs not covered by Medicare alone.

The cost problem has contributed to an access problem. The number of nonelderly Americans covered by employer-based health insurance fell from 66 percent to 61 percent between 2000 and 2006, with small business employees affected disproportionately.8,9 Indeed, in 2007, only 45 percent of firms with three to nine employees offered health benefits, in contrast with 99 percent of firms with 200 or more employees.10 Firms that are less likely to provide health benefits also tend to have a significant part-time or low-income workforce, are not unionized, and are in nonmanufacturing.

With few affordable alternatives, people losing employer coverage often become uninsured. Nearly 16 percent of the population 47 million Americans, were uninsured, up roughly eight million since 2000. Approximately 80 percent of the uninsured are in families with at least one worker. While most uninsured have low incomes, more middle-income working Americans are falling victim to this trend. Nearly half of the increase in the uninsured population between 2005 and 2006 occurred among middle-income families.

For the first time in history there is bipartisan call for health reform. Leaders of such companies as AT&T, General Mills, Intel, Kelly Services and Wal-Mart have joined forces with SEIU and the Communication Workers of America to form the Better Health Care Together (BHCT) coalition. BHCT is seeking health reform that promotes quality, value-based coverage for all Americans, with an emphasis on shared responsibility, and an implementation goal of 2012.

 THE FUNDING OF THE US HEALTH CARE SYSTEM

Let’s start with $2.1 trillion dollars. Of this amount, $1.1 trillion, or 54 percent, came from private sources of funding; $705 billion (34 percent) came from the Federal government; and $265 billion (12 percent) came from state and local government. Dividing further by major source of funding, the majority stemmed from private insurance, at $723.4 billion in 2006. Medicare was the next largest source at $401.3 billion, a rise of 18.7 percent from the prior year largely due to the introduction of the Part D drug benefit. Medicaid spending totaled $308.6 billion, and out-of-pocket spending comprised $256.5 billion.

In addition to government spending through Medicare, Medicaid, and public health programs, tax codes provide subsidies for over 90 percent of private health insurance and certain health care expenses. The most significant of these is the Federal and state individual income and payroll tax exemption for all employer premium contributions and many employee premium contributions. Under the codes, these premium contributions are not included as part of employee taxable income.

The cost of these exemptions, in lost Federal and state revenue, is estimated at $208.6 billion. This is the nation’s largest tax expenditure. The Federal tax exemption alone is equivalent to nearly half of what the Federal government spends on Medicare. The effect of these tax provisions extends beyond the impact on Federal revenues. In 2007, tax breaks were associated with $732 billion in employer and employee contributions toward health insurance.

The other major Federal health-related tax expenditures include deductions for medical expenses, self-employed medical insurance premiums and health-related charitable contributions. A tax break also exists for Health Savings Accounts (HSAs) tied to high-deductible health insurance. Consumers can make tax-deductible contributions to an HSA account that is then used for health-related expenses.

NOW HOW DO WE FIX THE PROBLEM

There is a disagreement on whether individual market competition or group purchasing can best achieve cost containment while promoting access to valuable innovations in care. This is very important because from what I witnessed in single payor government run health care systems innovations and creativity is sorely lacking. In addition to systems like Canada’s protectionism seems to be instilled in the frame work. Protection of the status quo which is also a big problem. There are proposals to change how people get insured, supporting a shift from employer-based and public coverage to the individual (i.e. nongroup) market. There all proposals, that seek to reform current coverage options by building on existing sources of coverage. Others support a shift from private to public insurance (e.g., a single-payor system). I am not convinced that this solution is the Holy Grail for America. Beyond these differences, health reform proposals are similar in their goals of improving the value, sustainability, quality, and coverage of health care for all Americans.

They often include policies that promote practices of sharing information through health information technology; make useful price and quality information available to patients, providers, and purchasers; and invest in health services research to better guide public policy decisions. Perhaps most critically, the need to constrain health care costs is an overarching theme of many health reform proposals. That, in turn, has yielded support for policies such as aligning financial incentives for providers and patients toward early and effective disease detection. One thing is clear this is the perfect time to reform US health care. This could not have happened before this time the current economic climate is the perfect storm so to speak for change. So the way I see it is whoever can come up with a way to cover all Americans, foster innovation and technological advances. Promote competition, contain costs, train additional physicians and nurses as well as fast track and train international physicians and nurses. Without destroying the free market innovations that makes America great has a beautiful mind.

 

 

 

March 06, 2009

Health Care Reform We Are Going To Need The Wisdom Of Solomon


















By Melvin J. Howard


Reforming health care in the US will be a major task and it won’t be easy. The US health care system is complicated. So when I here comparisons to other countries and using their models to fix ours I just want to yell. Our system is unique and it comes with a unique price tag of over 2 Trillion Dollars. Whatever way we go it must be solved uniquely by Americans with industry knowledge. This week I am featuring some of the players and stakeholders in the reform effort. One is a economist, One has a MBA in health care the other a MD through all bring up valid concerns. I will also over the coming weeks submit several proposals that has a chance to become a working model. What is clear we need to fix this problem there is no getting around it.      

Will Healthcare Save the Country from Recession?

Posted by: Michael Mandel on January 04

I wrote this story in Businessweek September 2006. The headline reads “What’s Really Propping Up the Economy: Health care has added 1.7 million jobs since 2001. The rest of the private sector? None.” Well, here we are back to the same point again. The healthcare and social assistance sector added 37,000 jobs in December. By contrast, the rest of the private sector lost about 50,000 jobs. Over the past two months, health care and social assistance have added 66K jobs, and the rest of the private sector 8K.

In fact, I believe that the continued growth of health care employment will be the reason that the U.S. economy skirts official recession. With a baseline job growth of 30-40K per month, funded in large part by government spending, healthcare may be enough to keep the economy afloat.

 In fact, healthcare is this generation’s version of keynesian economic policy. Both Republicans and Democrats are willing to “borrow-and-spend” to fund healthcare (though Bush was able to sustain his opposition to expanding the State Children’s Health Insurance Program). In fiscal year 2008, Bush’s budget calls for spending roughly $750 billion on various health-related programs, up almost $40 billion from the previous year). That’s a river of money.

 You can argue about whether we should be spending more or less, about whether there should be a single payer or more competition, about whether the money is well spent or badly spent…but it’s there, and it’s paying for lots of jobs.

 MARCH 08, 2007

 Why a Health Care MBA? - Health Care's Role in the American Economy

 The health care industry promises to be a major force in the American economy over the course of my career. Already comprising 16% of the GDP, health care is expected to balloon to 25% of the GDP by 2030. Late last year, Business Week had an excellent article entitled "What's Really Propping Up the Economy" that I recently re-read. It articulates well what the health-care industry currently provides and promises to provide in the future to the American economy.  

 ENORMOUS WORKFORCE:

 The article states that, since 2001, the health-care sector has added 1.7million jobs to the American economy, while the rest of the private sector (aside from construction and real-estate adding 940K jobs) has lost 1.2million jobs. The article claims that the US unemployment rate is 4.7% (at the time of the article's publication), significantly below European counterparts at 8.2% and 8.9% (Germany and France). But without the addition of health care jobs, the US employment rate would be 1 to 2 percentage points higher. If current trends continue, 30-40% of all new jobs created over the next 25 years will be in health care. The other promising sector of the past decade, the information technology segment, has turned into "one of the greatest job-growth disappointments of all time", losing over 1.1million jobs in the past five years.

INCREDIBLE INVESTMENT:

The health care sector is fortunate to be perceived as incredibly valuable to society, and thus governmental spending provides about half of all health care dollars (ranging from Medicare paying for hospital costs or the NIH funding promising new academic research ventures). The total expenditure is already over $2 trillion and growing. These monies are propping up economies and local job markets all across the United States as communities erect new or different provider facilities or promote economic development by incentivizing biotech or research facilities to headquarter nearby. Private industries, from hospital networks like HCA to insurance companies like Humana, to pharmaceutical companies like Merck, also provide tremendous investment into the system, and already are becoming dominant forces in the US economy both through their monetary outlay, their massive workforce, and their impact upon almost every American citizen.

PROBLEMS OF THIS GROWTH AND INVESTMENT

Sounds promising right? While "propping up" the economy and seeing tremendous growth opportunities, an economy that relies heavily on sector does not make an efficient system. Heavy governmental spending (predominantly through support of Medicare and Medicare Part D - which are increasingly seen as a right of citizens as the government has "promised" payment to seniors for their health expenditures) is straining the federal government. Federal outlays have totaled $600 billion in 2005, roughly one quarter of the entire federal budget, causing some to fear that the American government is increasingly reliant upon borrowing from foreign investors (like China) to support growing health care investments and costs.

American corporations and businesses also are feeling the burden, as an increasing segment of their budget goes to providing health care for their employees, leading some to cite an outflow of jobs from the American economy for locations that provide governmental health care. As most consumers know, the costs of receiving health care are also increasing well-beyond inflation rates. This is caused by a deficient system that attempts to "pass the buck" to the next person: Pharmaceutical companies attempt to recoup R&D expenses (already sunk costs) by charging the American consumer more (other countries negotiate prices with the pharma companies to keep their prices down); the healthy are financing the care of the sick; the working funding the retired; the insured covering the uninsured, etc. 

There are also incredible inefficiencies at all levels of health care that, in any competitive market, would be quickly worked out. However, with many different segments within the industry not playing traditional market roles (the consumer/patient is not the payer/insurance companies; the government is a provider - VA, a payer - Medicare/Medicaid, and an innovator - NIH funding of research), these inefficiencies are not resolved as segments again "pass the buck" of responsibility.

WHY A HEALTH CARE MBA?

No matter what the future is of the economy, whether the health care sector is allowed to grow unrestrained or the government places a cap on spending, health care will remain incredibly important to Americans. Therefore, the industry needs knowledgeable leaders of tomorrow to help navigate future challenges. These leaders must understand every segment, how they interact, what they think, future trends, and historical context. This knowledge can only  be gained from a comprehensive knowledge of the health care industry, and the Health Care MBA from Owen School of Management at Vanderbilt provides that. I have personally learned tremendous amounts of sectors of the industry I would never had examined before coming to Owen. I have shared this knowledge during conversations with major business leaders and future employers, and I know that I will look back upon this education as being the most singular important of my career.

| Posted by Tyler Richardson on March 8, 2007 |

 

SUNDAY, DECEMBER 14, 2008

Doubling Down   Westby G. Fisher, MD, FACC is a board certified internist, cardiologist, and cardiac electrophysiologist (doctor specializing in heart rhythm disorders) practicing atNorthShore University HealthSystem, Evanston, IL and is an Associate Professor of Medicine at the Feinberg School of Medicine, Northwestern University, Evanston, IL. 

 

Barack Obama is placing a heavy bet on health care as the nation’s economic savior.

I wish him well as he goes “all in.”
 

But his "prescription for change" contains potions that are not a safe bet for our economy. And yet we are told, we have to change,
 immediately:

“It’s not something that we can sort of put off because we’re in an emergency,” he said. “This is part of the emergency.”

I nearly had to slap myself when I realized he was saying what I said they'd say:

“Now we are in crisis. There is no choice in crisis. You must do as we say.”

And so, as part of the Great Promise, we are led to the three cornerstones of the current already-constructed-but-not-yet-implented plan: Information Technology, Prevention, and Paying Incentives for better care. These things, above all others we are told, will save us from ourselves and ultimate economic collapse.

And I’ve got some ocean-front property in Arizona I’d like to sell you.

But before you put down a contract, let’s look briefly at these cornerstones:

Information Technology to Build “Efficiency”

To frame my comments, realize that I work in a hospital system with one of the most “efficiently” deployed installations of the hospital information system
 EPIC in the country. We have inpatient and outpatient versions of the software fully implemented. It is a wonder to behold as I efficiently type my operative note, copy the referring physician, and send a copy of my note to our billing personnel before the patient even leaves the operating room. Within seconds, literally, the ICD9 codes are analyzed, the diagnoses cross-referenced to assure they jive with the procedure codes, the whole package sent to the billing “scrubbers” to be sure the electronic Medicare claim submission form has all the t’s crossed and the i’s dotted, and * BOOM* off to Medicare the bill is sent, even before the patient leaves the laboratory. Man, talk about efficiency! 

If there’s something out of whack when Medicare gets it, it’s sent back electronically, with a pointer to the boo-boo, and because of the “efficient” claims denial service that “works” the accounts receivable to get back to me as I see another patient so I can change the diagnosis code to a “more appropriate one” that will insure payment according to their “efficient” reimbursement assurance algorithm: *ZAP* we send it back. It’s the most efficient game of electronic ping pong you’ll ever see! So efficient, infact, that instead of our accounts receivable of 110 days before the system, we’ve now cut them to about 38!

And as anyone in business knows, cutting the time in accounts receivables to less than half is REALLY how you measure efficiency of any business system!

Oh sure, there are plenty of other “efficiencies” built into IT like ours. It’s hard to quantify them all. Nurses
 love the "efficiencies" of charting now. And who can argue with the efficiencies of lab reporting with this system? It’s truly remarkable to order a test and get the results routed to your in basket the same day or maybe even within the same hour. Seriously, it’s impressive. I’d hate to do without this now that we have it. This is "good" efficiency because it helps doctors to their jobs. Zipping those reports instantaneously to me and providing them to the referring physicians probably shortens hospital stays and saves money, but is that enough to offset the cost of the additional testing that's being performed these days? I wonder. 

That's because electronic medical records greatly facilitate
ordering tests, too. Tests that haven’t been done in a year or screening tests that are made to assure “quality.” (“Gee, I wonder how his ejection fraction is doing? Maybe I should get another echo.”) Alerts can be programmed to assure you order tests or consults. Just a simple *click* and another test is on its way. Increasingly when patients are admitted, nearly every one has a “critical pathway” designed for “efficiency” of care based on “best practices.” Panels of tests and consults medications are ordered automatically with just one click rather than ordering them individually. What could be more efficient? Heck, it’s so easy, I just want to order MORE, don’t you? Get them in, get them out. Over their length of stay? Where’s our Coordination of Care representative? Can't we move him to a skilled nursing facility? Let’s GO people! Efficiency, efficiency, efficiency! 

Seriously, where is the cost savings to our health system with this model of “efficiency?” Is it to our health system as a whole or for the business administrators who get their money faster from the Medicare National Bank while it’s still solvent? Will skilled nursing facilities be our Great Savior in this time of economic need as we try to demonstrate cost savings to the system, or will they just facilitate patient bounce-backs? Will we dare to examine this?

Prevention to Save Costs

This cornerstone scares me because short of the public health initiatives of seat belts and smoking bans, we’ve done poorly at saving money with “prevention” initiatives when it comes to costs. One only needs to look at Illinois who still permits motorcyclists to ride without a helmet to have some understanding for my skepticism here. Or nationally, we can look at the Jupiter trial that
 promises to save millions of lives if we just put patients on a little Crestor. I’m feeling cost savings there! And prevention effectively means more testing of the healthy, more ominous spin from reporters assuring your death if you don't get checked, and plenty of advertising to boot, which leads to more revenues and costs. But it's all in the name of “efficient use of our health care dollar," remember? We're so proud of our "guidelines," too. Even when these "guidelines" are manipulated to assure people receive expensive tests or devices "in the name of quality." It's hard to see the cost savings here, folks.

Paying Incentives for Better Care

Now this is an interesting concept that is so flawed it boggles the mind. If we just do as the Big Boys say, walk lock-step in unison with the ever-growning (now, 153)
 Great Directives, we will be paid the full amount due. Seriously, do the policy wonks think hospitals and doctors were born yesterday? Presently, legions and legions of people now work on the Hill just to get a jump on the Lastest Edict coming from On High so they can implement the change to their work flows and assure payment from the Medicare National Bank. (You know, I’ve got a dog I can train to do just about anything I want, too.) But where are the cost savings with this model? To date, pay-for-performance initiatives have been a dismal and utter failure at controlling costs. By their own admission:

"Since we began accepting the quality data in July 2007 for the 2007 PQRI, we have identified and begun to remedy issues and questions raised about the 2007 PQRI results and feedback. CMS analysis of the results of the completed first cycle of reporting has identified a number of unanticipated issues we believe may have impacted the success of physicians and other professionals in meeting program requirements for reporting quality data. These issues, which are outlined in more detail in this report, include claims-based reporting mechanisms issues, National Provider Identifier (NPI) numbers not being included on the claims forms, incorrect quality reporting data or claims submission errors and the content of the feedback reports."

In our system, it cost more to implement this "initiative" than earned from Medicare. But why stop? We should do MORE! Change those doctors' behavior! Tell the IT boys with their “efficient” systems to put a “hard block” in their orders so they HAVE to be sure to order another test or write a prescription or show that we’ve counseled them on smoking (we did, didn’t we?) to assure we get paid. Look how “efficient” we are! See the money we're saving?

And so it goes.

IT, Prevention, and Pay-for-Performance: all bad bets for cost savings. But as Mr. Obama goes “all in” by building health care bigger, we must realize the risks inherent to this approach for our economy. Can we really provide “affordable, accessible health care for every single American,” without even a modicum of conversation about the true costs involved?

These bedrocks for change, while interesting, will be a losing hand for our economy without serious constraints on spending. Instead, get the employers out of the game (what are they for anyway? They only cloud the real costs involved). Provide incentives for training and maintaining primary care doctors. Work tort reform nationally. Discuss and implement end-of-life care limitations. Transparency. Cut the middle men. Do the Insurance Pool thing. Spend a little up front on IT so we can SIMPLIFY billing and collections.

But please, oh PLEASE, stop touting prevention and pay for performance as our health care saviors.

To do otherwise is risking fiscal disaster.

 

February 25, 2009

How will the US please stakeholders on both sides of the issue when it comes to health care



























Will we get it right while everyone else got it so wrong
Universal Health Care For All

By Melvin J. Howard

As the US is about to experiment with reform to health these are my words of caution. I to believed in a "universal health care system". Who wouldn't support that goal? Doesn't everyone have a "right" to health care? Sounds goods "Affordable Health Care for All". Now for the hard part it takes a lot of research of the topic and understanding economic reasoning and history behind the promises of a single payor system. Having gained my experience of socialized medicine in London and Canada. I realized that government intervention in the market (e.g., Medicare, FDA regulations, physician licensing, insurance regulations etc.) is the reason for artificially high health care prices. It’s not the main reason but it’s up there on the list. What I witness in other countries will have the same effect on the US Health Care System.

Universal Healthcare amplifies all problems:

1) Reduces patient incentives to find the best possible prices for the best possible services/products available.

Patients in the U.S. who receive "free" (taxpayer-funded) health care will have no incentive to conserve their health care dollars. Care is "free" so they visit the doctor's office several times a month or request "free" prescriptions for over-the-counter medication such as Tylenol.

2) Reduces physician incentives to provide competitive care and reduces drug companies' incentives to provide new drugs and treatments.

With no incentive to provide quality care because they will be backed up or can't get efficent O.R. time, physicians and nurses leave the government-monopolized area for better opportunities in a freer country. Shortages will result. Drug companies will be hindered by price controls and regulations and soon cease research and development of new medication. In the U.S., start-up drug companies cannot afford to run the FDA gauntlet, so a few established corporations will dominate the market. Medical technology will be reduced and slow to come to market.

3) It comes from your wallet through higher taxes.

Yes, you do have a right to health care, just as you have a right to food, shelter and property. However, you have no "right" to force others to provide these things for you - All "free" medical care is subsidized through taxes made through compelling means. Believe me some will abuse this right repeatedly.

4) The quality of "free" health care will deteriorate and the average citizen will get sicker.

As the poor and middle-class wait in agony for simple procedures, those with resources can travel to other countries for treatment.

5) Destroys your privacy.

Suddenly your problems are mine and mine are yours. If you eat unhealthy foods or drive a motorcycle without a helmet, I have a direct interest in your business - you are going to see a provider on my tax dollars. Your neighbors might support government bans on smoking, "unsafe" sex or other "risky" behaviors to reduce costs. Politicians will use the federal bureaucracy to force you and your family to comply with programs such as the "New Freedom Commission on Mental Health". The Government will control your medical records therefore Patient doctor confidentiality could be compromised.

6) Destroys your liberty.

When you blindly support a system that bestows power on politicians and bureaucrats, they will receive their orders from those that have strong ties to Government and that won’t be you.

Physician shortages will be the norm:

TORONTO - An association of Canadian doctors is urging the government to provide $1 billion Canadian (U.S. $765 million) to help combat a national shortage of health care workers. By MSNBC

At its annual meeting in Toronto on Tuesday, the Canadian Medical Association said health-reform experts have identified shortfalls among all types of physicians, nurses and technicians as a major obstacle to reducing long waiting lists for procedures that include joint replacement, heart bypass and cancer care.

A report by the association analyzing the shortfall shows Canada has 2.1 physicians per 1,000 residents, ranking it 25th out of 30 countries in the Organization for Economic Co-operation and Development, a forum that assesses economic and social policy.

The medical association wants Canada's government to provide $1 billion Canadian (U.S. $765 million) over five years for a national Health Human Resources Reinvestment Fund to increase the number of openings for medical students and postgraduate training positions, while fast-tracking residencies for medical graduates from other countries and establishing a program to recruit and retain health care professionals.

The fund would also be used to set up an institute to map out the number of doctors, nurses and other care providers that will be needed in the future.

Health Minister Ujjal Dosanjh has said the resource issue will be a key item on the agenda when provincial premiers meet with Prime Minister Paul Martin on Sept. 13 to discuss health care. Health reform is meaningless unless we ensure an adequate supply of doctors and nurses with the infrastructure and tools that they need to attend to their patients," said Dr. Sunil Patel, president of the 58,000-member association. 

Increased waiting times that are inevitable when medical business in monopolized by the government.

Susan Warner swallows addictive painkillers every day to ease the crippling pain she endures waiting for knee-replacement surgery. By Jason Fekete Calgary Herald

One of her knees gave out in October and the Calgary woman has been waiting for the surgery since. However, Warner, 51, is lost in a lineup for the operation at the Rockyview General Hospital that she says could last 18 months.

"It's inhuman. The quality of my life is horrible and there's absolutely nothing I can do about it," she said Tuesday.

Waiting lists are crippling Canada's health-care system and frustrating patients and doctors alike. The Canadian Medical Association released a 10-point prescription on Tuesday that targets waiting lists for surgery and diagnostic procedures like MRIs and CT scans.

It proposes setting benchmark waiting times for surgery, hiring more health professionals, and expanding options for Canadians to get treatment in other jurisdictions.

In Calgary, as the city expands, so does the pressure to get people treated at local hospitals in a reasonable amount of time.

There are about 25,000 Calgarians waiting for surgery or scans at the city's four major hospitals. And the Calgary Health Region estimates waiting times for surgery are growing at an astronomical rate of 12 to 18 per cent every year.

Alberta Health's website says waiting times in Calgary are as follows:

- 62 weeks for a hip replacement at Peter Lougheed Centre;

- 62 weeks for general surgery at Rocky- view General Hospital;

- 30 weeks for MRI scans at Foothills Medical Centre;

- 54 weeks for knee replacement surgery at Rockyview General Hospital;

- 11 weeks for cardiac surgery at Foothills Medical Centre.

For Warner, the wait has come with a heavy price. She says she has become addicted to painkillers that are a daily staple to help her hobble through her workday.

Warner's a photographer, a job that keeps her on her feet most of the day, with or without her cane.

"I know I'm addicted. When I wake up in the morning, I'm shaking and have headaches," she said with a sigh. "I'll have to deal with that after the fact."

In their report, Canada's doctors and nurses are sending a direct message to premiers meeting this week in Niagara-on-the-Lake, Ont., for three days of talks largely on Canada's ailing health-care system.

In its report, titled The Taming of the Queue, the Canadian Medical Association and Canadian Nurses Association argue the Canada Health Act should be revamped to help Canadians get quicker access to better health care.

Waiting for care is part of the "normal functioning of any health system," the report says, but warns excessive waits can have "significant health and economic impacts."

During the June election, Prime Minister Paul Martin identified waiting lists as the top issue facing the medicare system.

He vowed to spend $4 billion over the next five years to reduce waiting times, including focusing on five specific areas: cancer care, joint replacement, heart surgery, diagnostic imaging and sight restoration surgery.

The medical association's report proposes a 10-point plan to fix waiting lists, including:

Establishing reasonable waiting times for different procedures;

Allowing hospital funding to expand or contract depending on pressures, so service delivery isn't constrained by budget caps;

Aggressively recruiting and retaining health-care professionals;

Prioritizing services and ailments through consultation with the public and health-care providers;

Improving the ability of Canadians to seek care in other provinces or out of the country.

The association's president said sustainable reforms -- not just more cash -- should be the premiers' focus if they hope to wean the system off its crutches. Access to health care in a timely manner is job No. 1 and Canadians expect nothing less," said Dr. Sunil Patel. "If (the premiers) focus on dollars alone, then we have lost everything. Canadians will lose confidence in their health-care system."

The report does say the system needs money."There is no doubt that the availability of resources does come to bear on the timeliness and accessibility of health-care services," the report says.The Calgary Health Region has thrown hundreds of millions of dollars into expediting care for residents.

In February, the CHR announced a $450-million plan to open new beds and operating rooms, and expand emergency and intensive care units at the Foothills Medical Centre, Peter Lougheed Centre and Rocky-view General Hospital.

"Our longest waiting lists are in orthopedics and general surgery," said Tracy Wasylak, the CHR's vice-president of surgical services. "We're hoping to put resources into both of those programs this year to drop those waiting lists."

Sick of waiting for her pain to be eased, Warner, meanwhile, said she looked to Montana to expedite the surgery. However, the procedure would cost $25,000 -- leaving her to wait and hope in Canada. It's brutal. I'm in constant pain," Warner said. "I can't work to full capacity. It's difficult to function."

Worldwide Experiments in Socialism

Varying degrees of problems with socialized health care

Great Britain By the Guardian

One in five patients who undergo a heart bypass operation are not receiving the best care while in hospital and some die who might otherwise have survived, according to a new report.

The study, funded by the Department of Health, found the shortcomings were not to do with the actual surgery. The problems lay most often in delays in recognising that a patient was deteriorating after the operation, delays in getting senior clinicians to see a patient and failures to recognise that a patient had other, potentially complicating, problems.

The study showed the importance of teamwork, as well as skill with a scalpel, to a successful outcome. Although the death rates, at less than 2%, are very low and heart surgery in the UK is well regarded internationally, the National Confidential Enquiry into Patient Outcome and Death (NCEPOD) says hospitals could do better.

"Two per cent mortality is very impressive," said George Findlay, an intensive care consultant and one of the study's authors. "This is a life-threatening condition, managed well. But for two out of 100 patients, that is a terribly bad outcome. The feeling is we could reduce that if there were attention to more organised teamwork."

One of the most disturbing discoveries for the study team was that half the patients who died had not been not told they were at risk of losing their life, even though the doctors knew it. "That is a big issue," said Findlay. "Even one in 10 did not have any potential complications explained to them. The issue of informed consent is quite a big one."

In two-thirds of the cases studied half of whom were patients who died poor organisation, communication and teamwork adversely affected care. The investigators found nearly half of health trusts do not follow Department of Health national service framework protocols, seven years after they were introduced.

The study was commissioned to look at the overall care of heart bypass patients, following much scrutiny of the death rates of individual surgeons. Cardiothoracic surgeons are the only specialist medical profession to have their individual death rates posted on a website, hosted by the Healthcare Commission. Its launch followed publication of individualised data by the Guardian, obtained under freedom of information legislation.

Sir Bruce Keogh, former president of the Society of Cardiothoracic Surgeons and now medical director of the NHS, asked NCEPOD to carry out the study. "It uncovered some systematic problems where there was room for improvement," he said. "As a speciality we are mature enough now to accept the criticisms and address them."

The spotlight will soon be on other areas of surgery. The Guardian revealed last week that data on death rates in a wide range of operations, taken from routinely collected statistics, will shortly be posted on the NHS Choices website.

Case study

The report cited the following case: "An inpatient waiting for urgent coronary artery bypass grafting had experienced new chest pain in the night prior to surgery. Surgery went ahead the next day as planned and the patient subsequently died. The operating consultant surgeon stated that the patient had clearly deteriorated overnight and that the cardiologists did not inform him of this fact. The [NCEPOD] advisers felt that it was the responsibility of the operating surgeon to ensure that the patient was still in an appropriate condition to undergo surgery and that a surgical review prior to operation would clearly have identified the problem in this case. However, the advisers also felt that this case highlighted a serious lack of communication between cardiology and cardiac surgery."

 Former Union of Soviet Socialist Republics

RZHEV, Russia -- Alexei Serov knew it was time to evacuate the pregnant mothers from his maternity hospital in central Russia when pipes began bursting and plaster started falling off walls. Health regulators closed the clinic, which hadn't been renovated in 40 years, and Dr. Serov moved his patients to a makeshift ward across the street. By Jeanne Whalen Wall street Journal.

Conditions there aren't much better. There is no elevator, so women must be carried upstairs to the operating room if complications arise during birth. A clinic for tuberculosis patients stands next door. And two children died last year because the hospital lacked a simple breathing machine that costs just $15,000.

"We physicians are working on the razor's edge," says Dr. Serov, who earns the equivalent of $130 a month. "All our problems boil down to a lack of financing."

The dire state of Russia's public-health system has helped create what President Vladimir Putin calls a national emergency: Every year nearly a million more Russians die than are born. Even with surging immigration, mostly from former Soviet republics, Russia's population has dropped from 147 million in 1989 to 145 million last year. Life expectancy among men -- who have been hit especially hard by alcoholism and heart disease -- has dropped by five years in that period to 58.5, the lowest level in the developed world. If current trends continue, many demographers predict Russia's population could fall to as low as 100 million by 2050.

These statistics have inescapable economic consequences. Economists say declining health will shrink the nation's labor pool and reduce its productivity, potentially complicating Mr. Putin's stated aim of doubling Russia's gross domestic product over the next 10 years. The cost of treating the nation's looming HIV crisis and the disease's drain on the work force, for example, will shave 10% off the country's GDP by 2010 if it isn't combated properly, according to a World Bank study.

In his first four years in office, Mr. Putin has introduced a number of tax and legal reforms that have helped strengthen state finances and ignite economic growth. But like many of the priorities he has set for the second term he is universally expected to win next month, improving the nation's health will be much harder. Beyond grappling with the widespread unemployment and low living standards that underpin the rise in illness, Mr. Putin must fix a broken-down health-care system largely untouched by the reforms that have swept other areas of society.

For decades before the Soviet Union collapsed in 1991, citizens received free health care, though the quality of service often depended on one's Communist Party connections. Though the system is still state-run, government financing has fallen by more than a third since Soviet times and covers only a fraction of patients' real medical costs -- forcing them to pay the rest out of pocket. Equipment is outdated; doctors and nurses earn barely enough to justify showing up to work. And a Soviet-era focus on in-patient treatment leaves far too many hospital beds and not enough general-practice doctors.

Russian officials are drafting a plan to overhaul the system, but many physicians criticize the Health Ministry in particular for moving slowly. The ministry didn't respond to an interview request, but in a report last year, Health Minister Yuri Shevchenko called health "an indicator of national prestige ... a necessary condition for high labor performance ... [and] the clearest measure of the effectiveness of government leadership."

In what Mr. Putin called a sign of hope, the birth rate began to rise last year for the first time since the fall of the Soviet Union. But being born in Russia is still a dangerous experience. Last month, six premature infants died in a regional hospital of a bacterial infection after nurses failed to sanitize machines that were helping them breathe. A state inquiry blamed the deaths in part on a lack of qualified personnel and equipment, and the chief doctor of the hospital was fired.

Because regional budgets fund the bulk of health-care costs, standards and health statistics vary drastically across Russia's economically diverse regions. Life expectancies can differ by as many as 16 years, according to a World Bank report published in October. And mortality rates in Moscow, home to most of Russia's new wealth, are now 55% lower than rates in some poorer regions, state statistics show.

A short drive out of Moscow reveals the rifts. Rzhev, population 70,000, produces most of the cranes building luxury apartment blocks and shopping malls 300 kilometers away in Moscow. But little of the capital's financial boom has trickled out to Rzhev. Local salaries are about $150 a month, compared with $380 in Moscow. Per-capita spending on health care is about $50 a year, or half what is spent in the capital.

Over the past 13 years, Dr. Serov has watched his maternity ward literally fall apart. He says the hospital has received no government funds for repairs or new equipment for more than a decade, forcing Dr. Serov to beg for grants from local businessmen to buy the occasional incubator. Across town, the chief doctor at Rzhev's main city hospital says he calls the crane factory when he needs an emergency infusion of cash.

Worsening standards of living, meanwhile, have damaged the health of local residents. "Earlier, women who gave birth were healthy, but now every other woman has some sort of pathology," says Galina Zuikova, an obstetrician at the hospital. Stress, unemployment and poor nutrition have helped lead to an increase in hypertension, kidney disease and infections in the women who come to the clinic. Smoking has climbed, too. Because of these problems, "there are more complications at birth than there were 20 or 30 years ago," Dr. Zuikova says.

Russia's constitution guarantees free health care for everyone, but very little is in fact free. Patients often pay the hospital or the doctor extra for better service or medicines. A recent study by the Independent Institute for Social Policy, a Moscow think tank, found that state financing covers only a third of health-care costs, with the rest paid by patients. Some Russians also have private health insurance, but this is still rare.

Where there is money, care can be quite good. Moscow's Center for Endosurgery and Lithotripsy, a private hospital founded 11 years ago by surgeon Alexander Bronshtein, offers Western-standard surgical and clinical care for Moscow's wealthy and upper-middle class residents. Heart surgery runs about $5,000. Top-notch physicians at the clinic earn $3,000 to $5,000 a month. "Patients come here for the high qualifications of our doctors, for the lack of lines -- they get things fast," says Mr. Bronshtein, 65 years old. "Unfortunately, not everyone can afford this clinic," he adds.

Sergei Shishkin, a health-care expert helping the state draft a plan for reform, says the government needs to scale back free care, boost the role of private insurance and drastically increase the number of general-practice doctors. He also advocates closing inefficient hospitals and reallocating funds to the best institutions and workers. Some of these changes will be introduced in draft legislation later this year, he said.

But cutting any of the cherished benefits could be a political minefield for Mr. Putin, who has been very protective of his sky-high approval ratings. One Moscow newspaper Wednesday reported that health-care reform will include the closing of some specialized clinics for children and women. The newspaper quoted Russia's chief pediatrician resurrecting a Soviet-era propaganda cliche in denouncing the move as "machinations of imperialism." The other countries are Cuba, New Zealand, Australia, but some other European countries are going the other way. Much of the pressure to experiment with privatization came from European Union regulations that forced reduced public taxation in Sweden. To function in a lower tax environment, Stockholm turned to the private sector with three goals in mind:

To remove the public monopoly on the delivery of health care services.To control the spiraling costs of public sector services by introducing market forces and competition.

To set new performance benchmarks (i.e., shorter waiting lists) for other Swedish hospitals to emulate. In every category, the experiment has been a success.

Removing the Public Monopoly on Service.

For decades, Stockholm relied on an underperforming civic health service monopoly characterized by long waiting lists, chronic overspending and flagging quality. Since the experiment began, virtually every sector of Stockholm's health system has undergone some form of privatization:Initially, the experiment included 150 private providers who were licensed to compete for health service contracts.

The contractors were originally allowed to compete for contracts in the non-medical services, technical services, ambulatory services, small hospital, home care and nursing home sectors.In 1998 the Council began the gradual privatization of all primary care.

In 1999 St. Göran's, one of Sweden's largest hospitals, was sold to the private company Capio AB.By the end of the experiment's first five years, all but one of the original 150 private contractors had survived and were flourishing. Likewise, by the end of the first year of its privatization, St. Göran's had shown significant improvements over its performance as a public facility. Somthing to think about as America tackles its health care issues learn from the mistakes that other countries have made. A mixture of public and private would be more on the right track than a purely Goverment run health care system.