During the health care debate, the Mayo Clinic, the Cleveland Clinic, Geisinger Health System and Intermountain Healthcare were repeatedly touted as models for a new health care delivery system.
Now, they have something else in common: All four have declined to apply for the “Pioneer” program tailor-made by the Obama administration to reward such organizations.
“When the poster boys ask that the posters be taken down, you have a problem,” says Michael Millenson, president of Health Quality Advisors LLC…
The four health systems are considered the most promising models for “accountable care organizations,” a new approach to delivering health care services that rewards doctors and hospitals for providing high-quality care to Medicare beneficiaries while keeping costs down. The ACO provision became one of the most highly anticipated elements of the health care overhaul, and providers embarked on a frenzied race to join in as quickly as possible.
But when the proposed regulation for the program was announced in March, excitement fizzled.
Hospital and doctor groups complained that the program created more financial risks than rewards and imposed onerous reporting requirements. The American Medical Group Association, which represents nearly 400 large provider organizations, responded with a letter to CMS warning that more than 90 percent of its members would not participate because of the reporting requirements and financial disincentives. In particular, the proposed rule would impose penalties for ACOs that do not achieve savings.
In response, HHS announced the Pioneer program in May, promising it would “provide a faster path for mature ACOs” like the Mayo Clinic that would allow the high-performing health systems to pocket more of the expected savings in exchange for taking on greater financial risk. HHS estimated that the Pioneer program could save Medicare as much as $430 million over three years.
The big boys in health care were so impressed by the latest-and-greatest rendition of Obamacare’s hot new ACO “reform” (which is little different than the disastrous capitated HMO model which went down in flames not so very long ago) that they responded, “Thanks, but no thanks.”
No doubt a new rendition of ACOs will be forthcoming soon, complete with a host of new regulations, onerous reporting requirements, and penalties for care which does not meet “quality” (AKA, low-cost) standards set by the government. After all, who knows more about “quality” than our sharp-witted wizards in Washington? Be afraid — be very afraid…
Centralized funding and control of health care is beyond disastrous. It is paving the road to national bankruptcy. The answer to this monstrous failure is, as always, more control, more regulations, more centralization. Sadly, like a runaway train, it hurtles down the tracks toward an inevitable trainwreck.
Let’s just hope and pray that there will be some salvageable pieces left when it all jumps the tracks. Physicians who have wedded themselves to hospital-based and other large ACO-aligned medical groups for security will find themselves among the wreckage.
The only hope for physicians in the long run is to move outside the current system of third-party payers and decentralizing toward a cash-based practice. The inevitable outcome of the coming disaster in health care (and no, our politicians won’t prevent it) is severe rationing of care, long waits for doctors visits, diagnostic studies, and surgery. For patients, catastrophic coverage (if you can get it) with HSAs will ultimately prove the safest and most reliable way to get access to health care.
As individuals and small groups, physicians have proved to be an independent lot — “herding cats” a common metaphor for getting the profession to toe the line, even on matters beneficial to them. Once they have been herded under one roof, however, the job of controlling and coercing them becomes far easier.
Ever hear the term “ACO”? No? Better get familiar with it, because this is your future.
Accountable Care Organizations are the government’s new carrot & stick to control costs and micromanage the health care profession and industry. Those of you who’ve been around a while may remember HMOs — the insurance industry’s innovation in the late 80’s to get control of spiraling health care costs. Using a mechanism called capitation, the HMO would pay a lump sum to physicians and groups to manage “patient lives.” The theory — which worked, unfortunately — was to flip the incentives: rather than “reward” physicians for providing medical services and ordering tests and procedures, remunerate them instead for doing less: the less care provided, the more money the physicians got to keep.
Can you say, “moral hazard”, boys and girls?
It worked–all too well. Primary care physicians became “gatekeepers” whose job it was to make sure no “unnecessary” care was given. Need to see a specialist? No can do. CT scan? Unnecessary, don’t you know. Every time the doctor said “no”, their wallet got a bit fatter. It cut costs dramatically when introduced. Of course, patients got sicker; cancers took longer to diagnose and treat; needed diagnostic and necessary but expensive treatments were deferred or not done at all. While some unnecessary and redundant care did get eliminated, the overall effect was disastrous. Since the HMO’s bore significant financial risks, it became a fine art to “manage” those risks, to wit: you had to make sure that the “patient lives” you contractually managed were not very sick, lest you break the bank taking care of medical disasters, poorly-compliant patients (typically the poor), and the elderly. The system imploded when patients revolted, followed shortly thereafter by politicians (who had been prime movers behind the HMO juggernaut) demonizing the monster they themselves had created. No worries: they now had a new straw man to attack, the “evil insurance companies” of their own design; this ogre lives on to this day.
They say that insanity is repeatedly doing the same thing, while expecting different results each time: enter ACOs.
So what are ACOs?
Like most bad ideas, the concept originated in the think tanks of academia, where “health care experts” who never take care of patients dream up idyllic solutions to problems they don’t understand. ACOs are defined as follows:
ACOs can generally be defined as a local entity and a related set of providers, including at least primary care physicians, specialists, and hospitals, that can be held accountable for the cost and quality of care delivered to a defined subset of traditional Medicare program beneficiaries or other defined populations, such as commercial health plan subscribers. The primary ways the entity would be held accountable for its performance are through changes in traditional Medicare provider payment featuring financial rewards for good performance based on comprehensive quality and spending measurement and monitoring. Public reporting of cost and quality information to affect public perception of an ACO’s worth is another way of holding the ACO accountable for its performance.
The ability to provide, and manage with patients, the continuum of care across different institutional settings, including at least ambulatory and inpatient hospital care and possibly post acute care;
The capability of prospectively planning budgets and resource needs;
Sufficient size to support comprehensive, valid, and reliable performance measurement.
In English, for those fortunate souls unschooled in the lingo of academic health care policy , this means a health care organization, comprised of hospitals (with their associated services, such as radiology, operating rooms, inpatient beds, physical therapy, etc., etc.), doctors and other health professionals (e.g., PAs and nurse practitioners), all centrally managed with an eye toward controlling costs and those who generate those costs (see “providers”, above), large enough to generate meaningful statistics on costs and health care “outcomes”, reportable back to Medicare and Big Insurance for their “review.”
The benefits to providers of aligning with such a cumbersome, micromanaged, top-heavy beast? You got it: the lure of filthy lucre:
In exchange for investing in this reformed health care provider structure, the ACO members will share in the savings that results from their cooperation and coordination. Thus, ACOs can–theoretically–act as a reform tool by incentivizing more efficient and effective care. This would help to combat the current perverse incentives of overutilization and overbuilding of health care facilities and technology.
[The ACO model] was built on what is (to my consulting colleagues, anyway) a stunningly obvious discovery: Medicare spending for physician services tends to cluster around hospital service areas.
The policy leap that led to the ACO idea was that since these “communities” already use hospitals, let’s assume that they and their hospitals are actually “virtual organizations” and give them a global budget. Consumers would not be aware that they were being treated by ACOs. Rather, they would be “attributed” to them: virtual patients of virtual organizations. Aggregate health spending for attributed patients would be tracked, and increases in that spending would be capped using a form of “shadow capitation.” ACOs that lived within the caps would get their fees increased. Those that overspent would see their fees reduced or frozen.
Some policy types on the Medicare Payment Advisory Commission (MedPAC) became intrigued with the ACO idea and saw it as a solution to the Sustainable Growth Rate (SGR) problem, a durable policy headache bequeathed by Congress to physicians in the Balanced Budget Act
The SGR cuts payments to physicians when health care costs rise, nominally maintaing “budget neutrality”, and has been routinely overridden by Congress because of real concerns over restricting access to medicare patients.
If a national SGR didn’t work to constrain physician behavior, why not create a hospital service area–specific SGR?
Fisher and colleagues theorize that when you cap the total resources coming into a specific “community,” hospitals and physicians would form organizations to accept and manage the global payments. This would create an economically motivated community lobby for not building more hospital beds, not recruiting additional cardiologists, not putting CT scanners in physician offices. Little delegations from the ACO would visit the high utilizers and work with them to get them to give up their diagnostic equipment and reduce their incomes. (As Dave Barry would say, “I am not making this up.”)
The problem with this movie is that we’ve actually seen it before, and it was a colossal and expensive failure. During the 1990s, many hospitals and physicians believed that the Clinton health reforms would force them into capitated contracts with health plans. This catalyzed a flurry of mergers and physician practice acquisitions, all motivated by a desire to control the stream of payments from health plans, rather than being subcontractors to those who did. Many system builders assumed that they would increase their market share through selective contracting at the expense of docs and hospitals that remained unorganized.
Risk-bearing physician/hospital organizations and hospital-sponsored preferred provider organizations (PPOs) sprang up all over the country. They typically paid their docs a discounted fee based on prevailing rates in the community … in anticipation of capitated health plan payments. Some of these hospital/physician efforts actually succeeded …
However, these were outliers in an expensive failure. Employers and patients preferred open panels managed by health insurers to closed panels managed by providers. Billions of dollars were lost. After rivers of red ink, most bold 1990s hospital risk-sharing experiments were terminated, along with the CEOs and physician leaders who created them. Many of the practice acquisitions were reversed, as hospital systems sought to rein in their expenses and adjust to an open-panel world dominated by point-of-service style health plans.
The State of Massachusetts seems headed toward imposing an all-payer mandatory, communitywide ACO model for cost containment purposes. There is time to reconsider what I think is a reckless decision. … the Massachusetts ACO experiment is likely to be a gory and comprehensive failure. Virtual assignment of patients, virtual organizations, “shadow capitation” superimposed on fee-for-service based economically independent docs, further consolidation of local hospital monopolies: we really ought to know better….
The sad reality is that most hospitals, even the well-managed ones, simply lack the tools, leadership, and leverage to enable them to bear and manage global risk. Many will not possess them in a decade. The mandatory ACO (apparently still a live option in the June 2009 MedPAC report) is one of the worst health system reform ideas since the Health Systems Agency. Fisher and his colleagues are attempting to broaden the idea to encompass independent practice associations (IPAs), existing multispecialty groups, even academic health centers. But the core idea remains that physician communities and hospitals in defined geographies are viable economic units. They are not.
The elephant in the room — never addressed in this grand schema to control costs — is the medical liability monster. Huge amounts of medical services and costs are driven by defensive medicine. ACOs will provide no protection to their physicians as they drive down costs by haranguing them while denying services, diagnostic tests, and procedures based on cost, thinly disguised as “quality.” Every physician hears the voice of an attorney when he decides to order a medical test, which may be of marginal benefit to the patient: “Doctor, didn’t you realize that by ordering a CT scan, Mrs. Jones’ cancer could have been diagnosed earlier, and cured?” The defense that “My ACO told me it was unnecessary and expensive” will be no defense at all: “And when you refused to order that scan, Doctor, you stood to make more money, didn’t you?” Devastating–and inevitable.
But the bottom line is that medical decision-making will become further removed from the patient and his physician, decisions now moved to faceless bureaucrats with Excel spreadsheets and no medical degree. Once again, the “experts” will win — and you will lose.
Almost cut my hair,
Happened just the other day.
It was gettin’ kinda long,
Could’ve said it was in my way.
But I didn’t and I wonder why,
I feel like letting my freak flag fly,
And I feel like I owe it to someone…
I’m suffering from whiplash — perhaps I should call one of those attorneys whose ads I see at bus stops and on the back of grocery carts…
In a recent post, I waxed euphoric about a big transition in my professional life, wherein I would move from being a solo practitioner to a hospital group employee, working predominantly in an inpatient capacity, with a much reduced load of office paperwork and business responsibilities, with the expectation of significantly more free time. I was truly excited about these possibilities, and felt great relief at the promise of unloading the crushing burden of paperwork, compliance with endless government regulatory demands, intrusive and abusive audits, and a host of other ugly and unpleasant parasites which suck all the life out of the profession of medicine.
More pay, less work — what’s not to like?
That was yesterday. And this is today: I have decided not to pursue this course — or perhaps, more accurately, this is not the course chosen for me to pursue.
The decision is, in a way, rather shocking, a wrenching change of direction for which I was wholly unprepared, and which is still deeply unsettling. I feel in some ways like the shipwreck sailor, watching a passing ship — recently his only hope of salvation — sail slowly into the distance, as he floats, unseen and unsaved. At yet there is a certainty that this sudden change of course is the correct one — though I’m quite in the dark about what comes next.
So what changed?
Nothing whatsoever about my current situation: private solo practice, as it is now configured, has become an enormous burden in so many ways. It’s ugly — and getting uglier in a hurry.
Much of the non-medical world seems dimly aware, if at all, of the tectonic changes occurring in health care. Patients are beginning to notice that their doctor’s practice name has changed to something like “Big Hospital Medical Associates”, but otherwise see little change: they can still see their doctor, the staff is, by and large, the same familiar faces, no worries, carry on.
Behind the scenes, however, the changes are enormous. As of 2009, 65 percent of established doctors were in hospital-owned practices. That percentage is growing rapidly, as physicians and other providers, such as nurse practitioners, flock to the perceived safety and security of large groups and hospital-owned practice affiliations.
The attraction is undeniable: offloading the burden of burgeoning administrative and regulatory requirements; attractive first year salaries and sign-on bonuses, combined with the promise of more free time and predictable schedules; and the lure of better reimbursement for services due to a large organization’s greater heft in negotiating contracts with insurance companies. It’s easy to overlook the potential downsides when the eye candy is so attractive.
After much happy talk and eagerness from the hospital recruiters and medical administrators, the process of merging my practice with the hospital group moved like continental drift. Months passed with no action; emails and phone calls were answered slowly, if at all. My frustration was enormous, but the delay proved a blessing in disguise.
The bad news trickled in slowly, as I waited, impatiently. A large local hospital group announced layoffs of nearly 400 people, for starters — no administrators or middle managers, of course: only the clerical and support staff that keeps a practice running. A busy surgical practice with an incompetent scheduler could not fire her (her race guaranteed a discrimination lawsuit), so they simply eliminated her position — and now they have no permanent scheduler for a year. Other schedulers were moved offsite, far removed from the physicians and practices whose lives they controlled. A former associate, a true workaholic who routinely saw 50-60 patients a day, had his salary cut because he wasn’t productive enough(!!). Highly-trained support staff were told they could not perform certain procedures because the hospital legal department decided their license did not permit them to perform them — although the procedures themselves were not restricted under their state licensing privileges, and they were far more highly skilled and experienced at these procedures than those “credentialed” to do them.
Hospitals lose $150,000 to $250,000 per year over the first 3 years of employing a physician — owing in part to a slow ramp-up period as physicians establish themselves or transition their practices and adapt to management changes. The losses decrease by approximately 50% after 3 years but do persist thereafter. New primary care physicians (PCPs) contribute nearly $150,000 less to hospitals than their more-established counterparts; among specialists, the difference is $200,000. For hospitals to break even, newly hired PCPs must generate at least 30% more visits, and new specialists 25% more referrals, than they do at the outset.
Chained to the oar, the galley master pounding out the cadence…
After 3 years, hospitals expect to begin making money on employed physicians when they account for the value of all care, tests, and referrals. … Outpatient office practices of employed physicians seldom turn a profit for hospitals.
Interesting — most private outpatient office practices are profitable, although less and less so.
Hospitals are willing to take a loss employing PCPs in order to influence the flow of referrals to specialists who use their facilities. In the 1990s, hospitals usually guaranteed physicians nearly 100% of their previous year’s salary during their transition to hospital employment. This arrangement invariably led to losses, since drops in productivity were coupled with higher overhead expenses and less-effective revenue-cycle management. Today, aggressive hiring of PCPs is returning, in part because hospitals fear physicians’ becoming competitors by aggregating into larger integrated groups that direct referrals and utilization to their own advantage. Hospital-employed PCPs generally direct patients to their own hospitals and specialists affiliated with them. In addition, by employing physicians, hospitals retain maximum flexibility in the market, should health plans change their reimbursement structures to require providers to bear risk and manage population health…
Though hospital employment may offer physicians some protection from system reforms, it comes with more performance management than it once did, and the option of reverting to independent practice later may be far less attractive in the future. Employment choices that physicians make today may not be able to be undone.
The hospitals hope to make up for their physician employment losses by improvements in productivity and “performance management” [read: controlling physicians' decision-making based not on quality, but on cost]. That these economic “efficiencies” are largely illusory — and will harm patient care — will become evident in time. This scenario played itself out in the early 90’s, when hospitals bought up practices in anticipation of Clinton Care. They proved financially untenable and ultimately imploded, after massive cuts in support staff and physician salaries made continued hospital group affiliation untenable. The enormous economic pressures soon forthcoming through ObamaCare and ACOs (more on these anon) will invariably result in similar scenarios — with far fewer escape hatches for increasingly unhappy physicians. They will be locked down by highly restrictive regulation and “care standards”; locked in by non-compete clauses and the insurmountable hurdles to starting or returning to practice; and locked out completely of the decision-making processes which control their lives and their profession. Expect a tsunami of early retirements and career changes when this is fully implemented.
And in the unlikely event the hospitals succeed economically at this venture, through the will to power, you may be assured that the vultures will soon descend to strip the pink flesh off their bones:
The consolidation wave [hospitals acquiring practices] is raising red flags among some regulators, researchers and health insurers, who warn that bigger health systems can use their leverage to push for higher rates. “We’ve always been concerned about combinations that are being done to increase prices,” said Karen Ignagni, chief executive of America’s Health Insurance Plans.
These factors made for a long and poignant pause in my rush to employment. But the final straw proved to be the realization that my reconstructive infertility specialization, built laboriously over 30 years with much hands-on care and effort, would die on the vine under hospital management. I would lose control over pricing; lose control over my superb supportive employees who are masters at communicating with patients an the many issues involved in these cases; and lose the freedom to provide discounted and charity care when the Spirit leads.
So my “Dear John” letter went out, two weeks ago. My employees were ecstatic at the news, my wife enormously supportive of the decision (she had previously been a major force prompting me to seek the security of hospital employment, and has now done a complete 180), and I have an enormous peace with the decision in my own soul. Perhaps, like Odysseus, I have been tied to the mast, lest the Sirens lure me onto the rocks of disaster.
Of course, the problems of sustaining and surviving in the hostile environment we now inhabit in health care remains; thus it becomes now a journey of faith.
Ah, faith: not the blind confidence in the unbelievable, but trust in the eminently Trustworthy, without the clarity of vision one might wish, but with the vision of hope based on experience. He has never let me down; He will not do so now.
An entirely new industry has cropped up in recent years as trial lawyers set their sights on making money off physicians, corporations and other targets–particularly financing malpractice suits through hedge funds. In 2010, hedge funds invested $1 billion in these types of suits, much of it for medical malpractice cases…
… the rewards can be remarkable for investors, which is why dollars are flowing into these hedge funds. Payouts can result in tens of millions of dollars.
George Soros, call your office…
Having milked all the money they can from sub-prime mortgages, derivatives, credit default swaps, and political largess from wholly-owned and operated politicians, and after causing a depression or two, our financial wizards now turn their attention to where the real money is: suing doctors. Gotta love it. Ya think, maybe, just maybe, our tort system is a little out of control?
In days gone past — when there was hope about changing such things — I would have launched into a diatribe about the need for reigning in the lawyers, tort reform, etc. etc. Perhaps age, experience, and a touch of wisdom have led me to see the futility of such righteous indignation. Simply put: the system is never going to change. Sadly, we are locked in: the consequences of our current tort system is carved in stone, and they will be both inevitable — and ugly.
The system will never change because the system is the problem: most politicians are lawyers, and lawyers pour ungodly amount of money into the politicians’ pockets — the Democratic Party is a wholly-owned subsidiary of the Trial Lawyers Association (90 percent of its $30.7 million in contributions since 1989 went to Democrats). The AMA — purportedly representing physicians — is now a political, socialist animal, having embraced the dark side themselves, making hundreds of millions selling the diagnosis and procedure codes to physicians required to be (under)paid by the Feds and big insurance.
Tort reform? Fuggeddaboutit. When it has been passed at the state level, it has been gutted by the courts (need I mention that judges are lawyers, too?). And tort reform will do nothing to change the enormous cost increases brought about by defensive medicine — at best it may moderate malpractice insurance premiums, when it survives the courts, which it rarely does.
So what’s the inevitable consequence of this disastrous medicolegal monster? Access, my friend, access — as in: none:
Frivolous lawsuits are helping drive physicians out of the profession and pushing up the cost of health care. A Gallup-Jackson health care survey released last year found that $1 in every $4 spent in health care is for unnecessary tests and procedures that doctors order to prevent from being sued.
As 32 million new patients acquire health insurance under ObamaCare and the number of Medicare recipients doubles over the next decade, the physician shortage will be worse than ever. Hedge funds that target doctors will not only make health care more expensive, but they will make a doctor very hard to find.
The parasite has grown fat and happy sucking blood from its host — but at some point the host weakens and dies. Best pick his pocket now, while the gettin’ is good. His days are numbered.
Stay healthy, folks — the doctor will likely not be around when you need him. Maybe you can call your lawyer instead — or your friendly hedge fund manager.
Dr. Bob is a physician in the Pacific Northwest, the fortunate husband of his wife of thirty-five years and father of three truly remarkable children. Blessed by the grace of God with the great privilege of knowing His Son, and having experienced the limitless depths of His mercy, patience and forgiveness, he desires to serve Him and others well.
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... every now I find a new blog (new to me, anyway) and see something there so resonant and stirring that I can honestly say that I feel a thrill of excitement at the discovery ... Dr. Bob can surely write, but he can also think and feel, and he can write eloquently about what he thinks and feels ...
The doctor was indeed in touch with a number of important things that rise and fall within the soul of America, but can never die. The page contains the essays, ever growing in strength and clarity, of Dr. Bob ... Of those “voices rarely heard,” Dr. Bob's is among the best.
Dr. Bob ... is one of the smartest, most disciplined and most intense people blogging today. When he takes up a subject he makes it melt with the intensity of his concentration. The quality of his blog is perfect, and he is a person who won't settle for anything but the best. All of this, and good character as well. It's a rare and admirable combination.