Mayo Clinic Family Medicine in Arrowhead Arizona Will No Longer Take Medicare Patients

The Mayo Clinic now has two family medicine clinics in Arizona. Beginning January 1, primary physicians at one of those clinics will no longer see Medicare patients unless they are able and willing to pay an annual $250 administrative fee, plus $175 to $400 per visit . They will also have to agree to“an appropriate number of visits each year, including physicals.

 The total annual costs for the physical and three office visits would be about $1500, according to  the letter that Mayo sent  to the 3,000 patients who receive care at the clinic. The letter also informs those patients that they will not be able to transfer their primary care to another Mayo facility.

Michael Yardley, chairman of public affairs of the Mayo Clinic in Arizona, said the changes are necessary because Medicare’s reimbursement rates for primary care are so low.  "It has been difficult for us to be able to sustain our own medical practice in a way to provide the best care to patients and for us," he told a local news outlet,  “For some the $1500 annual fee- will be cost-prohibitive, and that’s why it’s so painful," Yardley acknowledged. "We have a list of physicians for them that are accepting new Medicare patients. We have done homework in that area, and we have customer service representatives for folks who we are encouraging them to talk to about it."

Keep in mind that the median income for U.S. seniors is $20,000—and that includes Social Security, investment income, pensions, income from part-time work—every penny that comes into the house. This means that half of all seniors rely on less than $20,000 a year—in some cases, far less. This is why $1500 for primary care, in addition to whatever Medicare co-pays and deductibles they face for drugs and other services, could easily be more than many can afford.

In the letter, Mayo said it will continue to  accept Medicare for critical care and specialty services as well as lab services and physical therapy—but not routine primary care. (So much for the idea of a “medical home.”)

Mayo warned earlier this year that its operations were struggling. In a March statement, hospital administrators said income from  patient care dropped to $205 million in 2008, down from $293 million in 2007. The hospital also estimated unpaid portions of Medicare and other senior programs at $765 million for the year. 

Under health care reform, primary care physicians are likely to receive higher fees. The House bill promises increases of 5 to 10 percent (depending on whether there is a shortage of primary care physicians in a given area),  plus bonuses for physicians who deliver higher quality care.

But this Mayo Clinic isn’t going to wait for reform. According to hospital officials “this is a two-year-pilot program.”

It’s  not entirely clear what the program is piloting.

When I called Mayo headquarters in Rochester Minnesota a source  told me  that Mayo CEO Denis Cortese is “not available this week.”  I’m still waiting for a Mayo official from Arizona to return my call, as promised.  When he does, I’ll update this story.

In the meantime, I can only wonder: if one of the Mayo Clinics family practices is going to dump its Medicare patients will other physicians around the country soon follow its example?

Postscript:  Mayo in Arizona Returns My Call

 A Postscript: Michael Yardley, Mayo’s chairman of Public Affairs in Arizona did get back to me. When I asked what exactly this pilot program was piloting, he replied.  “We’re essentially trying to look at a different way of delivering health care.”

 I’m afraid I interrupted him: “a new way of delivering care—by not delivering care?”  No, he explained, the clinic would continue to deliver care as long as patients could pay $175 to $400 out of pocket. He quickly admitted that this would not be possible for everyone. “This was a very painful decision for us to make.”

“But,” he explained, “over 50% of our practice is taking care of Medicare patients. Primary care is a small component of our practice,” and so apparently that is why Mayo decided to pull back on primary care, while continuing to provide critical care.

Yet, if primary care is such a small component of the business, why couldn’t Mayo absorb the losses associated with being underpaid for primary care?

Medicare pays only about 50 percent of what it costs us to provide the service, Yardley explains.

And what does it cost Mayo to see a primary care patient? An office visit costs us $175 to $400, says Yardley—“the range that we are asking patients to pay.”  

Wait a minute.  It actually costs Mayo $175 to see the simplest cases?  Of course that $175 to $400 includes not just the doctor’s time, but overhead. Still, begin with the doctor’s time: how long does the average routine visit with a primary care physician last?

“One hour,” Yardley replied.

“In other words,” I asked, “If I went to a primary care doctor at your clinic with a sore throat, and said that it hurt so much that I was afraid it was Strep (the only reason I would go to a doctor if I had a sore throat), the doctor would spend sixty minutes swabbing my throat, and explaining that if it was Strep, I would need antibiotics?  Otherwise, he might explain, I should drink plenty of liquids  . . .

Of course, the doctor might also ask if I had had Strep in the past, or other ear, nose and throat infections.  No doubt there are other questions that a good clinician might ask. But how could he possibly fill an hour seeing a patient with no complaints other than a sore throat?

It makes sense that he might spend an hour with a new patient on an initial work-up—but 60 minutes, as the average, for all primary care visits with patients who use this clinic for their regular care?

Yardley, who is after, a spokesperson, not the head of medicine at the clinic, really couldn’t explain. “The average visit is an hour,” he repeated.

I couldn’t fault Yardley. This is his job, and this is all that Mayo had given him to say. I expressed my sympathy that he, as an individual, has been put in an impossible position. He thanked me (without, in any way, faulting Mayo.)  

Finally, we talked about the fact that Mayo has been in the forefront of arguing that we need to make structural reforms in the way we deliver and pay for care in order to get better value for our health care dollars.

“Value” equals better outcomes at a lower cost. That is what the Mayo Clinic is all about.  At least, that is what I have told HealthBeat readers in the past.  

“But,” I asked Yardley,” if it costs Mayo  $175 to $400 to see a primary care patient, is that really good value for our health care dollars? Would you really expect taxpayers to pay that much?”

Understandably, Yardley can’t say how much taxpayers should be expected to pay.

 A final question: if Medicare is paying only 50% of what it costs Mayo to see primary care patients, does this mean that Mayo believes that Medicare reimbursements for primary care should be increased by 100%?

Yardley indicates that an increase at that level wouldn’t be “sustainable.”  Medicare would go broke.

In the end, all that Yardley can tell me is this:  “We are experimenting to see whether we can sustain our primary care practice with this new model of payment.”  In other words, it seems that they are trying to find out how many seniors in their area can afford the $1500 for a physical plus three office visits. (Of course if a patient has the misfortune to need more than three office visits in the year, he will need to ante up more than $1500.) 

 If patients have the money, the clinic will continue to take them.  Isn’t this rationing by ability to pay?  “We can’t provide primary care to everyone who wants care,” Yardley replies. 

This reminds me of something Rick Scott, the former head of HCA/Columbia once said, explaining why hospitals just can’t throw their doors open to one and all. In Money-Driven Medicine, I quote him:  “Do we have an obligation to provide health care for everybody? Where do we draw the line? Is any fast-food restaurant obligated to feed everyone who shows up?”  (HCA/Columbia is the hospital chain that bilked Medicare, paid kickbacks to doctors, and wound up pleading guilty to no fewer than 14 felonies, while paying $1.7 billion in criminal and civil fines. Scott walked away, “Scott-free” and now runs  “Conservatives for Patients Rights,” a group dedicated to blocking healthcare reform. (I wrote about Scott on HealthBeat earlier this year–March 3, 2009

Clearly, this is not what Yardley meant to say.  He is hardly Rick Scott. He is the spokesperson for Mayo in Arizona, and Mayo has failed to give him a good explanation of why they are doing what they are doing there..  I truly am sorry that he has the misfortune to be the subject of this post. To his credit, throughout the interview, he was polite and patient.  He did not make the policy. No one should blame him for being the messenger.

I wish I could direct my questions to Dr. Denis Cortese, Mayo’s CEO.  I know that both physicians and some at the higher administrative levels at Mayo read HealthBeat.  I’m hopeful that Cortese may see these queries—questions that anyone might ask– and somehow, explain what is going on here.The responses I’m hearing just don’t square with Mayo’s philosophy that “the patient always come first.”

I still believe that Mayo’s Rochester, Minnesota medical center acts on that motto.  I have spoken to doctors who have worked there for years. I have spoken to patients. I have seen research data.

But what on earth are they doing in Arizona? My guess is that, in the midst of the debate over health care reform, someone at Mayo decided to use an outlier clinic to make a strong political statement: “Medicare payments to family practitioners are far too low.” Agreed.

 But for a Mayo clinic to ask doctors to abandon 3,000 elderly patients hardly seems the most professional way to make that statement.  I wonder how primary care physicians working at that clinic feel about this. I’d like to hear from doctors and patients in Arizona. You can reach me at


27 thoughts on “Mayo Clinic Family Medicine in Arrowhead Arizona Will No Longer Take Medicare Patients

  1. Haven’t you said we should be modeling our practices off of the Mayo Clinic? Sure you don’t want to take that back Maggie?
    With their executive physicals and out of network fees. The Mayo clinic is not the panacea that the left makes it out to be.

  2. Is this even allowed? Sounds like balance-billing to me which is prohibited in most every agreement between insurers and providers.
    Anyway, it’s hard to know what to make of this. Mayo is supposed to be efficient enough to profit off Medicare rates, but maybe even they can’t do it on primary care. Also, the Arizona market is pretty peculiar in how dysfunctional Medicaid is and how high the uninsured rate is, so maybe this is something that’s unique to that market?

  3. Maggie
    Do you know if the Medicare patients being talked about in this situation have Medicare only, or do they have Medicare plus a private Medigap supplement insurance?

  4. The President continues to cite Mayo as an example of medical care done right. So, this must be good. Right?
    Primary care is undervalued and underpaid by the flagship government health care program, and insurer payments continue to dwindle. The ‘make it up in volume’ proposition tauted by congress when referencing impending Medicare cuts just doesn’t cut it in primary care it seems (because if Mayo can’t do it on volume, no one can).
    If this catches on, the increased spending on their continued ‘specialty services’ line, in the abscence of a primary care base, will surely bankrupt Medicare sooner.
    A political statement? Maybe just a dose of reality for the politicians. Perhaps we can prevent having to endure such a harsh treatment modality by preventing the imminent collapse of primary care through better payments for primary care services across the board.

  5. I too can’t understand why this isn’t seen as balance billing, which Medicare bars.
    that said, if it really costs Mayo $175 per visit and minute clinics can do simple things like sore throats for less than a third of that, doesn’t it make sense to boost in-store facilities sted of panning Mayo?

  6. The “mayos” are very different, more like a franchise than a corporation. See it in their own words:
    The issue I think you are seeing Maggie is the influence that business has at certain health systems. Some are physician run, some are business/lawyer run. The business run systems are all money oriented, no matter what name they put on the door, “Mayo” included.
    I made a few posts in the past that your comments were kind of in an I’ve never heard of or seen that before.
    Well now you have some experience with the type of system I have commented about.
    You will likely find that this mayo has a lobbying department and is well connected politically at the state and federal levels. No one will want to mess with them and your investigations will come up cold after hearing stuff from PR that simply doesn’t add up. Locals will likely say things off the record but not on the record. When you have the system dead to rights, a scape goat will be found and fired and then the cover will descend again.
    Keep digging on this one. This is could be a very interesting education.

  7. Ed, Gregory & Mike C, jenga, JCS and Jim
    You are mistaken. The Mayo Clinic in Arizona is not a franchise.
    See this statement: “Mayo Clinic in Scottsdale, Arizona is part of the Mayo Clinic health system.
    Mayo Clinic is a non-profit group made up of more than 3,300 physicians, scientists, and researchers as well as 46,000 allied health staff working at Mayo Clinic sites around the country. In addition to Scottsdale, Arizona and Phoenix, Arizona, Mayo Clinic has sites in Jacksonville, Florida, and Rochester, Minnesota. Mayo Clinic is the first (and largest) integrated, non-profit group practice in the world treating more than half a million patients each year.”
    Secondly, this was not a local decision, but rather part of a larger statement that The Mayo Clinic is making about both Medicaid and Medicare reimbursements.
    (Medicaid payments vary by state, but on average, Medicaid pays only 70% of what Medicare pays for the very same service. )
    In conjunction with the decision not to continue taking Medicare for primary care in Arizona, Mayo recently announced
    “that it will discontinue participation with Nebraska and Montana Medicaid.. Mayo attributed the move to a combination of factors:
    • Very low reimbursement rates.
    • The volume of administrative requirements.
    • The states are not part of Mayo Clinic’s primary service area.
    “From Jan. 1 onward, Mayo will serve Medicaid patients only from Minnesota and its neighboring states of North Dakota, South Dakota, Iowa and Wisconsin.
    Although the numbers affected in Minnesota are relatively small, the move by Mayo suggests broader issues are at play,” explained the Post-Bulletin in Rochester, Minnesota.
    Mayo spokeswoman Shelly Plutowski told the paper:.”The message is that something has to change with the way we pay we pay for medical services in this country. These are just the ramifications of dealing with the current reality.”
    Yesterday, the Rochester, Minnesota paper went on to the explain that : “Mayo’s national CEO Dr. Denis Cortese, who retires in November, has actively been trying shape national health-care reform to fit with Mayo’s vision.
    “His top priority has been moving ‘pay for value’ onto the national health-reform agenda.
    “Instead of the government paying more money if you do more tests, Cortese wants to be paid for more if you provide more ‘value.'”
    In other words, the medical center that keeps you healthiest, alive the longest, for the least amount of money with the least likelihood of making a mistake during your care ought to get the most money, Cortese and Mayo’s Health Policy Center have been arguing.
    “Mayo officials have been waging a public battle to make health reform a national priority since the presidential campaign.
    “Once President Obama was elected, even before inauguration day, representatives from Mayo’s Health Policy Center began meeting with members of Congress and with representatives of Obama’s administration in Washington, D.C.
    “U.S. Sen. Amy Klobuchar, DFL-Minn. got pay-for-value added to the Senate Finance Committee’s version of the health-reform bill.
    “But it’s not clear whether that version of reform will survive congressional debate.”
    Ed– I’m sure the Rochester, Minnesota newspaper has the story right. As the sub-head in the story puts it “Mayo Trying to Shape Reform”
    As I suspected, on the eve of the Senate Finance Committee’s final vote on its bill (which should come on Tuesday) Mayo is making a strong statement that it knew would draw attention.
    I still have misgivings about those 3000 patients who will no longer be getting primary care from
    Mayo, but in the case of Nebraska and Montana Medicaid patients, Mayo is making it clear that: “Also, patients with unique medical conditions that only Mayo can handle will still be able to arrange financing through charity care or other means and get treatment at Mayo in Rochester.”
    Mayo has always opened its doors to patients suffering from conditions that providers in the patient’s region can’t handle, and provides charity care for these patients.
    So this is not a business decision being made by businessmen. (As I explain in the post, Mayo is a huge operation and could easily absorb underpayment for 3000 primary care patients plus 50 Medicaid patients that it has been seeing from Nebraska and Montanta.)
    Rather, this is a political decision.
    As spokeswoman Plutowski puts it, Mayo is sending a “message.”
    Finally—and this is important– Mayo CEO Denis Cortese is opposed to a public sector insurance option. He believes that Medicare pays too little and that a public sector insurance plan would also pay providers too little.
    By calling attention to Medicare’s low payments for primary care, he is simutaneously making the argument that we shouldn’t have a public option in the final reformm plan.
    Here, I strongly disagree. I do agree what Medicare pays for primary care is too low–but its remibursements for some specialists’ services that provide little or no benefit to patients are too high.
    As the Medicare Payment Advisory Commission (MedPAC) has recommended, Medicare dollars need to be redistributed, paying more to providers who providing greater value–defined as better outcomes at a lower price.
    On that point, I agree with Mayo. But Cortese would disagree with me when I saw that private insurers Overpay for some services just as they overpay for many drugs.
    Finally, because of it well-deserved reputation for excellence (better outcomes, higher patient and doctor satisfaction) Mayo has been able to strike very rich deals with private insurers who want Mayo in their network.
    Cortese knows that Mayo would not be able to get such rich deals from a public sector plan–taxpayers can’t afford it.
    This, I believe, is the real reason he opposes the public sector plan.
    Finally, this does not mean that all physicians at Mayo agree with Cortese.
    He is the CEO, the fund-raiser, the public spokesperson–rather than the president of a university.
    It’s not clear what position Mayo will take on the public sector option after he retires.
    But I suspect that the way that Mayo practices medicine (which is not something Cortese directly oversees) will remain unchanged.
    See the whole story in the Rochester, Minnesota Post-Bulletin here.
    Gregory & Mike C
    Mike C is right:
    By law, physicians who accept Medicare cannot charge patients what they believe they should have been paid–beyond the amount that Medicare pays them.
    In other words, they can’t charge patient for the “balance” between Medicare’s fee schedule, and the doctor’s fee schedule and their onw fee schedule. This why it is called “balance billing”
    In order to avoid the rule that prevents “balance billing” for Medicare patients,the ARizona Mayo Clinic , is refusing to accept Medicare patients for primary care.
    By law, the clinic can charge primary care patients whatever it wishes–as lon as it is not accepting any primary care payments from Medicare .
    Doctors do this all of the time with regular, private-sector insurance. For instance, I recently saw a hematologist in Manhattan who took my Aetna insurance “only for hematology”
    She also does primary care, but does not accept Aetna for primary care because Aetna’s primary care reimbursements are too low. (Probably she also accepts Medicare patients for hematology–but not for primary care. )
    Jenga– See my reply to Ed.
    JCS– Insofar as Mayo is
    focusing on Medicare reimbursements for primary care, and Medicaid reimbursements, which are very low for everything, I agree– it is good to send this message to politicans.
    The point is not that Medicare reimbursements cover the cost of primary care when that care is devlivered by other doctors.
    Any primary care doc will tell you (rightly) that Medicare’s primary care reimbursements are way too low.
    MedPAC agrees.
    As I have explained in earlier posts, those reimbursements are so low because the fee schedule is adjusted by a committee that is dominated by specailists. Not surprisingly, they believe that their time is worth far more than a primary care docs’ time.
    And Medicare almost always accepts their recommendations.l
    Finally, the lobby representing family practitioners doesn’t have nearly as much clout with Congress as, say, the lobby represnting surgeons.
    Why? Because family docs are paid so much less, they can’t come up with the enormous campaign contributions that other
    physicians can ante up.
    Finally, Jim, if you’re getting your primary care from a clinic in a drug-store, I’d really suggest that you re-think your decision. It may be cheaper, but you’re not getting the continuity of care you need–particularly at your age.
    A drugstore isn’t a medical chome. And of couse, those in-store clinics are designed to sell you somemthing (over the counter medications, etc) while you’re there.

  8. OK thanks Maggie. I didn’t understand from the initial post that they were actually going off the Medicare network entirely. Pretty bold move.

  9. FEC reports indicate total 2009 Mayo Doctors’ Contributions to PACs: 21000.00
    The majority of these committees contribute substantially to Republican committees. Not all, just most. If you want to follow the money from beginning to end, it appears that Mayo physicians stand with the notion of no reform, or at least no reform that benefits the middle class, seniors and the poor.

  10. Karoli–
    Thank you– this is valuable information.
    But it doesn’t tell us where the majority of Mayo Physicians stand.
    It tells us where Mayo’s current administration stands. (Mayo Physicians are not involved in the money-side of Mayo–including where they spend their PAC money.)
    Mayo’s CEO, Denis Cortese, will be retiring next month.
    I don’t know anything about the person who the trustees have selected to replace him. . .

  11. Karoli–
    Thank you– this is valuable information.
    But it doesn’t tell us where the majority of Mayo Physicians stand.
    It tells us where Mayo’s current administration stands. (Mayo Physicians are not involved in the money-side of Mayo–including where they spend their PAC money.)
    Mayo’s CEO, Denis Cortese, will be retiring next month.
    I don’t know anything about the person who the trustees have selected to replace him. . .

  12. I disagree Maggie, look at the vast differences in their programs.
    The best examples where you can get detailed comparative numbers are in transplantation. See and compare the various Mayos but learn how to look for important figures first.
    I read the same PR you did. The difference is that I don’t buy PR but look at the internal numbers. Increased transparency is a very important reform.
    But if you want to find excuses for them, well I’m sure their PR will help.

  13. this issue isn’t all that new for mayo in arizona. they apparently stopped taking new medicare patients [for primary care] back in jan 2008.

  14. I agree that this development is disturbing, since it clearly a move for Mayo – and not the first — in the direction of get what the market can bear, at least in the currently underpaid area of primary care.
    However, I think I may know what Mayo is doing. To me, this appears to be an experiment in “concierge” medical practice, an emerging trend across the country whereby providers cut themselves loose from the normal insurance system and demand high out of pocket expenses. The fact that Mayo has done this in only one or two tiny facilities in their huge system (btw, does anyone know what the financial demographics of the areas where they are trying the experiment are) indicates that it is, as the spokesman told Maggie, a tiny pilot project designed to test what will happen. The fact that the spokesman is suggesting that appointments will be blocked out for a full hour fits with that idea as well. Concierge medical care typically involves primary care doctors charging much higher than normal fees, usually disconnected from insurance, to people at the top of the wealth scale in exchange for VIP treatment: instant access when they want it, no time spent sitting in the waiting room, long appointments to allow the patients to spend as much time as they wish.
    Mayo has programs for “executive” health care that already provide special privileges for people who are willing to pay extra. Thirty years ago, Mayo was already discussing how they might deal with a future of government run insurance by creating VIP medical care to draw people to Mayo at special higher fees.
    Many other health care systems already offer concierge care for people willing to pay extra, so Mayo is just testing the waters on its own.
    Housekeeping items: 1.) Medicare supplemental policies do not allow people to get more expensive care. Instead they pay the deductibles, co-pays, and co-insurance that Medicare normally charges. 2.) Mayo has no “franchises,” all parts of the system answer to the central control. 3.) Mayo has a history of working very hard to extract as much money as possible from every insurer that will negotiate; Medicare just won’t negotiate. (Mayo is in a public fight right now with Nebraska Medicaid over payments; they have fought with others in the past.) As the article points out, Mayo gets almost twice as much in payments from private plans as Medicare, even though they actually make a profit on Medicare. The “lost income” they cite is money they “would” have gotten if Medicare paid what Mayo is able to extract from private payers.
    One of the telling points here is that once patients are referred from the participating family medicine clinics, Mayo will then accept payments from Medicare. They are concerned about Medicare payments to primary care, not for specialists or for hospitals.
    Finally, for Jenga, Ed, and others: Mayo is cited in health care debates because they provide care for patients for a much lower TOTAL PER PATIENT cost than other vendors. These data come from the Dartmouth project, not Mayo PR. The Dartmouth Atlas actually points out that Mayo’s individual fees for services are actually higher, not lower, than other systems. The money they save is not due to lower fees but to improved efficiency and efficacy leading to lower overall charges, mostly because of less use of expensive tests, interventions, and surgery compared with their competitors. As this article points out, Mayo and its managers are not able to provide lower cost care because they are bleeding hearts, but because they have learned to provide care with less use of expensive management that does not contribute to effectiveness. I would not be startled if even with these high out of pocket charges at the primary care level Mayo actually provided total care for these patients for less than many other systems. After all, one less CT per patient would save all of the money that the out of pocket costs.
    I don’t like this program, since as a doctor I have always not liked financial discrimination in health care, but the plan is not relevant to Mayo’s role as one of the most effective and efficient provider systems in the country, or to Obama’s arguments that if the rest of the country conformed to the practice standards of Mayo and some other systems, we would save hundreds of billions a year and have better, not worse, health care.

  15. yep, sounds very much like concierge medicine.
    some demographics…
    google maps says the arrowhead clinic is in the northwest corner of glendale. from the 2000 census [income is from 1999]:
    median age 30.8 years
    median household income $45,015
    median age 35.6 years
    median household income $52,199
    median age 46.1 years
    median household income $44,156
    sun city:
    median age 75 years
    median household income $32,508
    sun city west:
    median age 73.2 years
    median household income $43,347
    median household income for arizona [1999] was $40,558.
    glendale’s poverty level is approximately equal to arizona’s average, the other4 communities listed here are well below average.

  16. i left out one important line in my demographics comment – peoria, surprise, sun city, and sun city west are the communities that are adjacent to that corner of glendale where the mayo-arrowhead clinic is located [according to google maps].

  17. Ed, hipparchia, Pat S.
    Ed– Mayo is not a franchise operation. When I say this, I am not basing my statement on Mayo’s PR.
    I am reading their financial statements.
    Also, please see the comment from Pat S– he knows Mayo well.
    Thanks for your comment.
    As you say, the demographics do suggest that Glendale might be good place to try out concierge medicine…
    Pat S.
    First you are totally correct that Mayo is a very large health care system, and one truly regrettable adminsitrative decision does not undermine what you rightly describe as:
    “Mayo’s role as one of the most effective and efficient provider systems in the country, or Obama’s arguments that if the rest of the country conformed to the practice standards of Mayo and some other systems, we would save hundreds of billions a year and have better, not worse, health care.”
    At the same time, this development on the business side of Mayo is, as you say “distrurbing.”
    I’ll be very interested in seeing what direction Cortese’ replacement takes.

  18. Ed, hipparchia, Pat S.
    Ed– Mayo is not a franchise operation. When I say this, I am not basing my statement on Mayo’s PR.
    I am reading their financial statements.
    Also, please see the comment from Pat S– he knows Mayo well.
    Thanks for your comment.
    As you say, the demographics do suggest that Glendale might be good place to try out concierge medicine…
    Pat S.
    First you are totally correct that Mayo is a very large health care system, and one truly regrettable adminsitrative decision does not undermine what you rightly describe as:
    “Mayo’s role as one of the most effective and efficient provider systems in the country, or Obama’s arguments that if the rest of the country conformed to the practice standards of Mayo and some other systems, we would save hundreds of billions a year and have better, not worse, health care.”
    At the same time, this development on the business side of Mayo is, as you say “distrurbing.”
    I’ll be very interested in seeing what direction Cortese’ replacement takes.

  19. Ed –
    I think you are confusing some aspects of large regional health care systems with franchises.
    Mayo, like Cleveland Clinic, Marshfield, SMDC, MeritCare, and other similar systems, owns and runs many facilities, with different levels of service available. Some small centers are typical family practice and primary care facilities, others are intermediate level centers offering some specialty services, and others, like the main Mayo center in Rochester, offer a full range of sophisticated high level services as national referral centers. The model assumes that the smaller centers will refer cases requiring more sophisticated care to the larger centers and potentially to the very large centers. All of these centers at every level are wholly owned and run by the system as a whole, and major policies are set centrally at the central administration. Smaller centers do have some degree of local control for many issues, but are still answerable for those decisions to the central system.
    This model is widespread in the Midwest. Mayo is the original model for the multispecialty clinic, but Marshfield Clinic is probably the early pioneer in extending that model to multiple regional sites of varying size and complexity. The model has been adopted to some extent outside the Midwest, both in centers established by the original clinics in other regions and by large regional providers. Systems like Kaiser and Group Health, although they are HMO’s, run on the same model as well, with referral of patients from smaller regional sites to large high level care centers as needed.
    Just because one of the system’s centers does not perform or performs fewer high intensity services like transplants and open heart procedures does not mean they are a “franchise.” Rather, they are one link in the large system. The model is more similar to an operation like Macy’s, which may have stores of different sizes with different ranges of merchandise, but are always willing to refer you to “our downtown store.”
    It is this system that allows Mayo to consider trying different approaches at different sites without compromising the integrity of the whole system, just as Target might experiment with a larger book section or more electronics at some individual stores without implying that they will adopt that throughout the system.
    I do not like the try at concierge medicine at one or two Mayo primary care sites, but I can understand it as an experiment and as a typical business management practice in any large system.
    This event does point out that if we want to protect access to quality health care for all Americans, including people on Medicare, we need to enact reforms protecting that access. It is the status quo, not the reform efforts, that threatens the future of Medicare and American health care.

  20. Mayo Clinic Arrowhead has not been a “medicare provider”. What that means is that when they see medicare patients the doctors are not taking assignment and therefore can charge 15% above the medicare allowance. The law requires that they bill medicare however, but the patient receives the payment from medicare.
    The reason the lab and hospital must take medicare patients is that to be a Medicare approved facility they must take medicare fees as payment and not charge the additional 15%.

  21. Dear Maggie,
    I’m sorry I used the word francise, but I submit that practices at the different Mayos are very different indeed and not due simply to population variation. Again, look at the numbers not the words.
    I wonder if they would open up their books enough to see if there is a difference in margin rates.

  22. Ed —
    Having spent time inside both Mayo and another large regional provider, I can assure you that different sites do have different margins, and indeed that different service centers within the same site have different margins, some of which are negative.
    However, that is by no means unusual. It is also certain that different Wal-Mart stores have different margins as well, but the overall performance of Wal-Mart is calculated from the results from the whole company. This is very common in businesses from airplane factories to McDonald’s.
    The different Mayo centers also have much different patterns of available services and of utilization of those services, for the reasons I explained earlier. This is a large UNIFIED health care system with the roles of its various units carefully thought out. That, by the way, makes it different from many stand-alone systems, which frequently duplicate services of other systems down the street, to the detriment of health care costs and the financial integrity of the systems.
    The line of control for Mayo Arrowhead passes through Mayo Scottsdale, the major regional center, to the Mayo mothership in Rochester. All decisions — and especially one this major — are subject to approval at each level. Mayo Arrowhead managers and physicians are not free to go off on tangents of their own. In fact, since Mayo Arrowhead is a very small family practice unit, it probably lacks a lot of the administrative infrastructure, referring those tasks upstream to Scottsdale. It most certainly does not have its own lobbyists, political allies, and so on.
    I am very puzzled by why you seem to think this makes Mayo suspect in some way, negates the idea that Mayo is a unified system, or negates the idea that Mayo Rochester and Mayo Scottsdale are two of the most efficient and effective health care facilities in the country, and that almost all Mayo centers outperform almost all other rivals in their areas.
    If you are upset that Mayo is structuring itself to assure that it stays in the black financially, you are confused about how health care systems, including health care systems in other countries, work. Health care systems must keep themselves financially solvent in order to continue to function. An organization like Mayo must pay a lot of attention to that issue or it will soon cease to exist. The same is true of the VA, Kaiser, and health care systems within the British NHS, in France, in Canada, in Sweden, and any place else. Every unit has someone in charge of making sure that the money going out does not exceed the money going in.
    What exactly is your point? Maggie and I may not have understood, being distracted by some of your incorrect characterizations of the Mayo operation. Perhaps you would explain.

  23. Dear Pat,
    My comment was not about Arrowhead, but the advantage a label, a brand name, has in health care.
    The brand can be used, or misused, to portray something. It can make it seem like something is true that isnt, or even worse, to portray the opposite of what exists.
    I have pointed out an example with a rich history and detailed clinical numbers with a more than 10 year history of each mayo within the backdrop of the practices in their region and across the nation. The accumulated transplant stats are a wonderful and accurate resource.
    Either look into it or not, that is your choice. From what you have written before, you are obviously pretty smart and capable. So I’d suggest doing the analysis before making a conclusion.

  24. Ed —
    I remain puzzled. What do you think the transplant data proves? How is Mayo trying to imply the opposite of what exists?
    I am not disagreeing with you. I am trying to understand what it is you are saying. It would help if you said it straight out. I am guessing that you feel that Mayo is using the reputation of its Rochester unit to sell care at much less sophisticated Mayo centers, like say Decorah, IA, but I am not certain.

  25. Either look into it or not, that is your choice. From what you have written before, you are obviously pretty smart and capable. So I’d suggest doing the analysis before making a conclusion.

  26. So the great Mayo Clinic, the most legendary and efficient health care provider in the US feels it needs to charge extra to take care of Medicare patients!
    What does this mean for us mere mortals?

  27. Legacy Flyer–
    Mayo in Rochester Minnesota accepts regular Medicare payments for all
    patients from within Minnesota.
    But it does not accept assignemetn for Medicare patients from out of state. This means that it can charge out of-state Medicare patients a premium–roughly 9% more than Medicare pays.
    Mayo attracts for many out-of-state patients that, if they didn’t charge a premium, I suspect their medical center woudl be filled with Medicare patients who have the time to travel, are usually retired (and so don’t have to worry about taking time off work.)
    A great many doctors don’t accept Medicare from out-of-state patients.
    9% may seem high, but Mayo also works out financial arrangements with patients who are not able to get the care they need in the area where they live.