What Australia can teach us about health care

As Americans, we are taught to think that a free market is good because it keeps prices low. In health care, however, free market forces breed complexity, and complexity is costly. Here is an example, taken from my day-to-day experience as a family doctor.

A few months ago, MaineCare (Maine’s state administered health plan) and Sepracor (a pharmaceutical company) contracted to save Maine money and make Sepracor money, a win-win partnership. Before the contract, most asthmatic patients used generic albuterol, a relatively inexpensive inhaler that opens the airways quickly so patients can breathe. After the contract, Xopenex (levalbuterol) became the preferred medication for MaineCare patients. It works, too.

So far, not a big problem, except that MaineCare patients must switch their prescriptions. Here is how that process works: Patients find out about the switch when they go to the pharmacy to pick up the medicine. The pharmacy staff realizes the prescription needs to be changed and calls the provider’s office. The provider’s office staff gives the message to the provider for review. The provider approves the change if it is clinically appropriate, then sends the message back to the office staff. The office staff relays the message to the pharmacy staff. The pharmacy staff can then change the prescription and notify the patient that it is ready to be picked up.

It takes each health care professional five minutes to make the switch, costing “the system” $10 per switched medication. The patient has to make an extra trip to the pharmacy, and is often delayed several days as the change makes its way through the system. As long as the patient is not having an asthma attack at the time, this is not a catastrophe, and we might still be saving MaineCare (and taxpayers) some money.

Now it gets more complicated: Sepracor recently “informed the state that it would not honor the remainder of its multiyear contract, terminating it effective June 30, 2008.” Its stated reason was that it was “not making enough money.” So now MaineCare is researching options, and will let doctors and pharmacists know what to prescribe sometime in the future. Everyone with MaineCare may need to be switched back to albuterol. So we will all go through the same switching process again.

If no one makes a mistake, and no one gets confused, and no one tries to argue that they need the Xopenex, and no one runs out of medication, and no one has to go to the emergency department, the two switches will only cost the system $20 per patient. About 10 percent of MaineCare’s 200,000 patients are asthmatic, so this works out to about $400,000 in costs to the system for switching to Xopenex and then switching back again.

Unfortunately, this spring alone, there are nine changes on the list of approved MaineCare medicines, the formulary. Worse yet, MaineCare is only one of Bangor’s third-party payers. My patients also carry Anthem, Aetna, Cigna, Harvard Pilgrim, Tricor and Medicare. Each insurance plan has contracts with pharmaceutical companies that change regularly. So multiply the Xopenex story by nine formulary changes and seven health care payers every three months. No matter how you do the math, the confusion and the cost are staggering.

This sort of complexity hurts patients, taxpayers, employers, doctors and pharmacists. We absorb the costs of the changes and the consequences of errors. So we are the ones who need to unite to create a simpler, more functional system.

Last year, I had the opportunity to work as a family doctor in the state of Victoria, Australia, in a suburb of Melbourne. I learned how to prescribe medications fairly efficiently in the nine months I practiced there. I still find it complex and time-consuming here after 15 years.

Victoria has a single formulary for the entire state. All Australian citizens have basic medical coverage (“Medicare”), and if they can afford it, they can purchase supplemental private insurance. The Victorian Medicare Pharmaceutical Benefits Scheme, essentially their formulary, guarantees that Victorian citizens pay a maximum of $30 per prescription for any drug on the formulary, regardless of the true cost of the drug. If a drug costs less than $30, citizens pay the market price for the drug. There are additional “safety net” provisions for people who are poor or who take many medications.

A team of doctors, patients, pharmacists and economists choose what drugs are on the PBS formulary and what the rules for sensible cost-effective use are. I found that patients, including those with supplemental insurance, were rarely willing to buy a drug that was not on the formulary, and pharmacies rarely carried non-formulary drugs. I quickly learned to prescribe within the formulary.

Australia spends about $2,300 per capita per year on health care. The U.S. spends $4,500. Australia’s infant mortality rate is 4.6 per 1,000 live births (20th in the world) and ours is 6.4 per 1,000 live births (37th in the world. ) The average Australian lives to be 81, the average American, 78.

We, Mainers, Americans, really can do better.

Karen Hover, M.D., of Orono is a family physician.