Thursday, July 29, 2010

Health Care - If I Could Change Just One Law

My wife and I are on a very nice summer cruise on the Seabourne Odyssey in the Black Sea. The main celebrity on the cruise is former Governor and Senator Bob Graham (Dem - Fla.) We had dinner with him and his wife last night, and a very nice couple from Santa Monica, one of whom sits on the Board of Cedars-Sinai Hospital in LA. We discussed many things, among them health care. Aaron, the Board Member, said that foundations seemed like a nice solution to him, especially since it was a good deal for the doctors, who got to have a salary. It was an amiable dinner and no noses were bloodied. But as I objected to corporate medicine, I was asked by the Senator if I could point to any examples of what I would favor in the US currently. I had to admit I couldn't.

As I thought about it, I thought I could respond to him with a short letter, what I couldn't say in the context of a nice dinner. Although it is repetitive of what I have cited here before, I thought it might be worth posting.

Here 'tis:

Dear Senator Graham:

Thank you for having dinner with us last night. It was a treat.

I was embarrassed to admit to you that I couldn’t cite an example of a good model of care somewhere in America that could be emulated. I had to retreat to “three yards and a cloud of dust.” So let me take just a minute to explain why I couldn’t come forth with a trenchant answer.. In brief, the structural problems of American medicine currently set a very unequal playing field that makes it difficult for excellent and adaptive new entities to form. As it stands now, the playing field is tilted toward large corporations to run medical care, which I don’t think will serve our interests well in the long term. So I think the rules of play need to change before we can get to really good systems of care that meet the objectives of patients and doctors alike.

Current Examples

Many analysts, most popularly Atul Gawande in the New Yorker, have cited the examples of the Mayo Clinic, Geisinger, etc. The problem with these examples is that they are elite and special examples, which have taken decades and more to evolve, and have very selected doctors and administrators. They are not going to be able to be replicated elsewhere – in fact, the experience of the Cleveland Clinic and Kaiser and Mayo is precisely that they find it hard to replicate themselves in other parts of the country.

But even if they could be replicated, would we really want that? They are highly structured and corporate entities. This kind of entity usually does not deliver the kind of personal care that our people are used to and want. Large institutions just can’t. As sociologist Eliot Freidson pointed out years ago in “Profession of Medicine,” as you get larger groups, the doctors are more keyed into the opinions and norms of their fellow professionals and even administrators, and less to the patients they serve. It’s only human. So we get what we call “institutional care” rather than personal care. Many patients really wonder if their doctors in these settings really care about them personally, and know them for who they are.

Current Forces

But even if these models are not replicable, we are getting more and more large medical entities forming as American medicine evolves very quickly. Conglomeration has gripped the industry, as hospitals have formed large chains and local monopolies, some large multi-specialty groups have formed, and these large conglomerations have become price-givers instead of price-takers vis-à-vis insurance companies. Using the RBRVS Medicare price system, hospital monopoly and large group contracts have been at a rate of 160% or even 200% of Medicare. Typical physician practices by contrast are at from 100% to maybe 130% of Medicare tops.

As an additional problem, the RBRVS Medicare system (their price list) grossly underpays primary care and non-procedural specialists, and overpays hospitals and procedural specialists. Since the private insurance companies also use the Medicare RBRVS as the basis for their payments, this payment imbalance reverberates throughout the system.

These two forces, hospital and specialist conglomeration and RBRVS payment imbalances, shape our current system. Prevention and primary care practices languish while hospitals and large systems are awash in money. They use this money to pay themselves, and to invest in themselves. Hospitals vertically integrate by employing doctors (in California through foundations), and specialty groups add ancillary services (physical therapy, MRI scans, etc.) Some think that foundations are a good deal for doctors since they don’t have to do the administration themselves and they get paid salaries, but this is only attractive based on the alternative of being starved by the current system of payment. The playing field is very uneven.

What HCR Could Have Done

While the Health Care Reform law successfully attacked many insurance practices that disadvantaged patients, it is completely silent on the insurance company practices that disadvantage small scale physician practices – exactly the practices that people are used to getting their care from, and exactly the practices that are least responsible for the rise of health care costs.

It is quite understandable that the Reform did not reach to the provider-side and stayed only on the patient-side. It was hard enough to get the bill passed as it was. But if political realities were different, what could the law have done?

Perhaps most importantly, the HCR law could have taken steps to even playing field. Currently, only the large conglomerated groups can negotiate with the insurance companies as a single entity. If a group of doctors want to negotiate the same way as these conglomerations, they too need to conglomerate themselves. That would mean, however, that they would lose the very individuality they are seeking to retain. The HCR law could have mandated an exemption from anti-trust law that would enable groups of doctors to negotiate as one with the insurance companies, just like the big boys. This would have leveled the playing field, at least somewhat. There are other steps that could be taken, but this would be the big one.

Personally, this is precisely the situation that we pediatricians find ourselves in the San Francisco East Bay. We have a fairly smoothly functioning group of pediatricians and pediatric specialists, and we would like to bargain collectively with the insurance companies. But because we are forbidden from doing this, we are picked off one by one by the insurance companies, while at the same time they are richly rewarding the large groups such as Sutter Foundation (tied to a dominant hospital chain), and Palo Alto Medical Foundation, which is allied with Sutter. In the oft-repeated words of my step-daughter, “Not fair!” These large clinics have no apparent superiority in services, they simply have more market power, delivered to them by federal anti-trust law.

Is It Just a Retrograde Dream?

Is this a retrograde dream, yearning only for the old, professionally rather than corporate dominated days? Maybe. But there is a theoretical work from the Harvard Business School, Redefining Health Care, that points out that an ideal system would not be an integrated network such as Kaiser or Mayo. At Kaiser, for instance, if the primary care doctor is acting as an agent for the patient, there is little choice of specialist – the patient is sent to the Kaiser cardiologist, or Kaiser neurosurgical clinic. It might be good or not, but it’s theirs. The HBS study says that it would be much better if the primary care doctor could choose among multiple specialty alternatives that compete with each other. This is not so much different from the system we are used to, but that is rapidly disappearing.

[Here is an example (not exactly what I was talking about, but close) close to my home: ValleyCare Hospital in Pleasanton, California, has recently established a Foundation, employed all the obstetricians who practice at the hospital, brought in new pediatricians (all new to the area and graduated in medical schools in foreign countries), and ordered the OB’s to refer all newborns to these new pediatricians. Patient interest? Not really. It’s corporate power interest.]

What the HCR Law Does Do

The HCR Law does look for some experimental changes, most notably the formation of Accountable Care Organizations (ACO’s). The ACO would get paid a set amount for various episodes of care, both within and outside the hospital. The major target for the ACO would be cost reduction by stimulating more coordination among providers. It might work, but there will be major fights among hospitals and doctors for control, and the hospitals will most likely win. If costs are actually reduced, good. We certainly need cost reduction. But this is an untried and slender reed to base major health reform on.

Many analysts have said, however, that the major underlying problem of our current system is the weakness of primary care. The average age of primary care doctors is constantly rising as younger doctors choose the better paid specialties. The HCR law funds more training slots and forgives some loans of graduates who choose primary care and practice in underserved areas. But to make an analogy, they are funding swimming lessons (training) but they are not warming up the pool (the practice of primary care) so that people actually want to go there. So these efforts are likely to be of small value.

The new HCR law does give more power to MedPAC, the agency that sets Medicare payments. They now can set rates that Congress would have to veto, rather than simply making suggestions to Congress, which is susceptible to special interest (hospitals, specialists) pressures. But, of course, this is simply one element.


In summary, I can’t point to a model that will work. I can only say that the course we are set on – large scale corporate control of medicine with emphasis on specialist care – will be a radical departure for American medicine, and will turn out to look far more like socialized medicine (very large scale, clinics, etc.) than most of us, patients and providers, would really want. There are some steps that could have been taken, and still could be taken, to allow us to evolve in a way that might give Americans and American doctors care with a human instead of a corporate face. To choose this path, the field must be leveled, and only government can do this.

Budd Shenkin


  1. Excellent analysis, Budd. Proponents of corporate medicine don't understand that physicians are not interchangeable, like assembly line workers. Corporate administrators will think, well, we have 50,000 children in our service area, so we need twelve FTE general pediatricians. Period. Whether these are 24 pediatricians each working part time, or 144 different pediatricians rotating through, each staying for a month -- doesn't matter, as long as the "slots" are filled.

    What nonclinicians fail to understand is that the primary care pediatrician who has a human relationship with the family provides better care.

    A. is a young lady with special health care needs who presented to my office this week with some vague complaints of not feeling well. If she had seen any of my partners, who are excellent physicians and have access to all of A's records through our shared EMR, they might not have picked up on the subtle changes she was exhibiting and promptly intervened like I did -- because I KNOW A.

    On the other hand, all of us can provide evidence-based care to J., but the best person to get her what she needs quickly (and cheaply, and cost-effectively) is my partner, because SHE KNOWS J.

    This is sort of a "touchy feely" assertion, and doesn't lend itself to an easy metric, but it could be studied: How are outcomes when CYSCN present to their PCP for evaluation vs. to another pediatrician in their PCP's group?

    If a corporate entity took over my practice (although I'm not sure they'd be too interested in rural, heavily Medicaid Tennessee -- another problem with corporate medicine) they would probably run the numbers and say, "We have 3.4 FTE pediatrician slots." They could fill them with J-1 VISA slots, or moonlighting residents, or people staying for a year to pay back their loans. But in all of these scenarios, no one is going to build up a relationship with A.'s family, because no one is going to stay there long enough to study her chart, her body, her family, and her needs.

  2. I must agree. That would have been hard to convey across a dinner table.

    As an avid reader of this blog, I am familiar with the points raised and appreciated them being consolidated in one post.

    It appears that you believe that no one has figured out how to operate in an efficient, effective, and customer friendly manner in the current environment - the environment being unfair. Unacceptable trade-offs are being made that undermine care, costs, and quality. It is hard to get it all right. These points are well taken as is the previous comment that family practices do better than corporate practices in customer services and probably quality of care.

    I am still struck by a couple of things. Perhaps we could pass a law that changes the environment. We could certainly grant private practices an anti-trust exemption. I fear however, that whatever adjustments like that are made, there will still be participants in the industry who believe something is unfair. I am not for bad laws, but eliminating unfairness in the marketplace as a prerequisite to a good health care system would seem to put the goal out of reach.

    We will have to make trade-offs. The difficulty we are having is agreeing on what those trade-offs will be. I can't help but think that the better solution, what ever that is, will hurt, kinda like a shot, but will be better for us in the long run.

    As for environment, the best is one that allows for creating and testing new solutions.