Provocative Posts on Payments to Providers, Mammograms, Marijuana, Using Comparative Effectiveness Research to Set Reimbursements … and More…

This fortnight’s Health Wonk Review is hosted by Louise Norris of the Colorado Long Term Care Insider who has done an excellent job of rounding up some of the most provocative health care posts published in the past two weeks.

Writing on the Incidental Economist, Austin Frakt explains that if we rein in health care spending, we have to go where the money is. And that is not in the health insurance industry. Insurance premiums are so high, in large part, because reimbursements to health care providers have been sky-rocketing, along with payments to drug-makers and device-makers.

“In each of the past 50 years payment to health care providers has accounted for more than 85 percent of health insurance premiums,” Frakt points out. “Thus, only a small fraction of spending on health insurance premiums is consumed as a cost of insurance. I have no doubt that there are ways to squeeze some efficiency out of the insurance system. But doing so is not likely to make a substantial, long-term impact on the inflation of health care costs.

“Sure, there are things that could be done to make health insurance premiums cheaper for some people, relative to what they might otherwise costs.  Some of those things are in the new health reform law. In combination, the mandate, the new exchanges and subsidies will put downward pressure on premiums, particularly for those participating in the non- or small-group markets.”

But when it comes to lowering costs system-wide Frakt emphasizes, “we need to remember that vast majority of private-sector spending is not tied up in the insurance system. Thus, focusing on insurance reforms alone while claiming to seriously address the long-term spending issues for everyone ignores this basic math.”

Will the law passed last year reduce costs? “A lot depends on the new, experimental ideas in it, like bundled payments, accountable care organizations and the Cadillac tax,” says Frakt. “And that is why we need to let those experiments play out — keeping at the cost problem.”

I agree. I would add that we know that many of these changes in how care is delivered—and how we pay for it—can save money. But we don’t know how much. These experiments will work well in some parts of the country, not as well in others. This is why the Congressional Budget Office and others haven’t been about to “score” how much will be saved.  But it is clear that, under the Affordable Care Act, the Secretary of Health and Human Services and the Independent Payment Advisory Board have the power to reduce spending—without needing approval from Congress. In the past, lobbyists have blocked most attempts to cut health care spending. Now they won’t have nearly as much power.

Frakt concludes: “To begin to address health care spending growth we need to follow the money. Providers, not just insurers, need to be part of the solution, and a big part of it — most of it, actually. Last I checked they have some very politically powerful organizations representing their interests, which makes this both technically and politically challenging. Reducing payments to providers takes money out of someone’s pocket.”

This won’t be easy. And it will take time. We cannot suddenly whack payments to hospitals or specialists without disrupting care. But we can “break the curve” of health care inflation by beginning to pay for value, not volume—and by refusing to pay for tests and treatments that provide no benefit to the patient.

On the question of unnecessary tests, Gary Schwitzer has taken on a sacred cow: mammograms.   Over at Health News Review, Schwitzer begins by reporting on a “mammogram party” at a local hospital that “offers women a dose of pampering to calm the nerves. In its description of the festivities, the Pioneer Press quoted two different hospital marketing people promoting their ‘Mingle & Mammograms’ parties. The story described pampering, appetizers, chocolate, sparking cider or wine, flowers, swag bags, massages, foot reflexology, and cuticle paraffin treatments.

“But in a 1,000-word story,” Schwitzer observes, “fewer than 100 words even hinted that there is important scientific disagreement about mammography. More than twice as many words were devoted to what marketing people said. There was not one word about the very real tradeoff between benefits and harms of mammography for women in their 40s.”

Schwitzer quotes what some experts have to say about mammograms:

“Dartmouth's Dr. Gil Welch (author of "Should I Be Tested For Cancer? Maybe Not, And Here's Why") wrote about mammography in a medical journal:  ‘The question is no longer whether overdiagnosis occurs, but how often it occurs.’ He included a table to explain the tradeoffs of harms and benefits (debits and credits) – and this was for 50-year old women, for whom the evidence of benefit is stronger than it is for those in their 40s. 

 “Welch explains: ‘The benefit of breast cancer screening is that some breast cancer deaths can be avoided. Unfortunately, it doesn't happen very often: most women destined to die from breast cancer, will still do so – even if they are regularly screened." So while in 1 in 1,000 benefits, the other 999 would be screened for 10 years and gain nothing. Some, as shown, are harmed.’”

Welch quotes other breast cancer specialists who note that despite all of the screening, overall cancer rates for breast cancer and for prostate cancer are higher than in the past: more patients are being treated and “the absolute incidence of aggressive or later-stage disease has not been significantly decreased . . . “

Meanwhile, another physician points out that “There are all sorts of commercial entities that stand to gain with an aggressive indiscriminate  screening message . . . Somebody, somewhere, is raking in boatloads of money.”

Schwitzer ends his post by saying: “This is not meant to discourage anyone from screening. It’s a call for accurate, balanced and complete information on screening to help people make informed choices

That would be something to celebrate.”

On Managed Care Matters, Joe Paduda tackles two other controversial subjects: Should Medicare negotiate for lower prices on drugs?  And should HHS base reimbursements on comparative effectiveness data, rather than the cost of providing care?  Paduda says “yes” to both ideas.  Over time, I think this will happen, simply because it must. We cannot afford to continue to over pay for drugs, and health care will become unaffordable for most of us if we continue to lay out enormous sums for treatments that are no better than—and sometimes riskier than—the less expensive treatments that they are trying to replace.

Norris reports that on Workers’ Comp InsiderJon Coppelman explains how legislators are trying to hash out (sorry) the details of legal medical marijuana and workplace regulations. The rights of employers to maintain a drug-free workplace and the rights of medical marijuana patients seem to be at odds with each other, and this issue promises to become more widespread as more states address the issue of legalizing medical marijuana.”

On HealthBlawg David Harlow offers insight into how Accountable Care Organizations might work.   He looks at “the Alternative Quality Contracts (ACOs) in Massachusetts that are somewhat similar to Accountable Care Organizations (ACOs), although,” Norris notes,  the latter have yet to be completely defined and rolled out. Harlow describes a recent presentation by the CEOs of BCBSMA and Atrius Health (a group of 700 doctors who participate in the ACQ), who detailed how they’ve implemented the ACQ, and how it could work as a model for ACO implementation across the country.

Over at Health Care Renewal Dr. Roy Poses reveals how corruption and conflict of interest is draining money from worthy global health initiatives. “He notes that recent news stories have focused on corruption in various large health-promoting organizations, and yet most health care organizations still have no initiatives in place to fight corruption and promote transparency and accountability.”

Norris spotlights a post by Jessie Gruman, writing at Health Affairs Blog, which “gives us an excellent (and very personal) look at the nitty gritty details behind shared decision making between patients and providers. As a current cancer patient, Jessie details her own experience with sharing evidence and decisions with her oncologist, but also notes how difficult it is to be actively involved in the decision making process while also coping with the pain and fear that often accompany a serious illness. But despite the obstacles, she notes that shared decision making is the ideal scenario, and something that both patients and providers should strive for." This is a brave and wise post. I recommend it to everyone.

At BNET Healthcare Ken Terry notes that insurers are striking back at high cost hospitals  by encouraging members to utilize lower cost options instead. “Although much of the focus of “healthcare reform” has been on insurance reform instead, this is one strategy that could actually lead to lower healthcare costs.  If large insurers offer financial incentives in the form of lower premiums and/or deductibles and copays for policies that utilize lower-cost facilities, high-cost hospitals might be more inclined to bring their fees more in line with the averages, even if it means being a little less profitable.”

Yes, as I indicated in my post below on “Hospital Consolidation”, I think this is the future. Insurers will be under pressure from state and federal regulators to keep a lid on premiums; this means that they will begin to push back if providers are  charging more than they can afford.

By contrast, John Goodman thinks that insurers will go right on overpaying. Writing on his Health Policy Blog, he details the cost-shifting that he thinks will be necessary “in order to implement the various reforms of the PPACA,” and notes that there are no free lunches. “Unless providers agree to earn less money across the board,” Goodman argues, “patients with private health insurance will be paying more in order to compensate for lower reimbursement rates for Medicare and Medicaid patients.”

Apparently Goodman didn’t read Ken Terry’s post. Goodman ignores the fact that private sector insurers have made it clear that they plan to follow Medicare in reducing payments to providers that charge more. And they will also begin to look at comparative effectiveness research and refuse to pay for pricey treatments that provide no additional benefits for patients who fit a particular medical profile. In South Carolina, for example, Blue Cross/Blue Shield has decided that it will no longer cover “spinal fusions” for degenerative disks. (As I explained in a recent post, there are better, less expensive procedures for these patients.)

Goodman also doesn’t seem to understand that in cases where for-profit insurers decide to follow Medicare’s model, and cut reimbursements which “overvalue certain services” (the language that the “Affordable Care Act” uses when giving the Secretary of HHS the power to cut fees), providers won’t be asked “whether they are willing to earn less money across the board.” They  will be told “this is what we are willing to pay.” The evidence from Massachusetts suggests that many patients will be willing to desert the most expensive providers if that means lower health care premiums.

As Austin Frakt explains in his post (above) the only way to bring down the cost of care throughout the system is to pare payments to providers. It won’t be easy. And it should be done carefully. But over time, it must be done. The alternative is that health care becomes unaffordable for the vast majority of Americans. 

As Norris notes: “One has to wonder if perhaps we’ve become a bit too extravagant in terms of what we expect from our healthcare. Do we want affordable medical treatment, or do we want a hospitalization to feel like a visit to a hotel? Maybe shared patient rooms isn’t such a bad idea (for all of us, not just those on Medicare and Medicaid), if it would help to bring down the cost of care.”

In much of Western Europe, hospitals are far more Spartan than in the U.S., but they provide care that is, by and large, just as good—sometimes better—for much less. This is how they can afford to provide universal coverage. 

I wish I could comment on all of the posts mentioned in the Valentine’s Day edition of Health Wonk. I urge you to read the entire round-up by clicking on this link.

66 thoughts on “Provocative Posts on Payments to Providers, Mammograms, Marijuana, Using Comparative Effectiveness Research to Set Reimbursements … and More…

  1. I truly believe that the ONLY way to bring about what you write, namely conformity, accountability and price rationality to our healthcare system, will be a form of monopsony payment, a regional single payer. This payer ideally should be an authority as separated from politics as possible and staffed by folks with a firm public health background.

  2. NG–
    A single payer system would have to be funded by taxes. Only the government has the power to tax people An authority “as separated from politics as possible” could not levy taxes. Only representatives elected by voters can levy taxes.
    In this country a large group (probably the majority) of Americans resents paying taxes–particularly if they are paying for something that does not directly benefit them or their famillies. (Health care for poor people; healthcare for obese people; healthcare for older people–etc. etc.
    For this reason there would always be opposition to taxes funding a single-payer system,and so, by definition, there would always be politics involved.
    I don’t think you fully appreciate the fact that most Americans do Not favor a single-payer system. We live in a democracy. Majority rules.
    Secondly, we already know what a regional single-payer looks like– that’s Medicaid. And i’s the most unequal, inefficient, fraud-ridden form of health care in the U.S.
    The last thing we want to do is turn heatlhcare over to the states. Some (like
    Mass.) would do their best to provide good care for all–though even in Mass. thousands of Legal Tax-Paying immigrants wil be left out of the heatlh care system in the state’s 2011 budget.
    Even in liberal Mass. people don’t want to pay the taxes needed to fund their healthcare.
    And in many states (Florida, where Rick Scott is governor, Texas, Arizona) a great many people feel that health care is not a right, and in other states (Alabama, Mississippi, etc.) the state is simply too poor to provide good care for all.
    Finally, NG–please keep in mind that Canada and the UK have the only single-payer systems, and their health care is not as good as in some Western European countries.(Though those countries do tend to have many non-profit insurers.)
    Single payer is not a cure-all. And, as Austin Frakt points out, it is not where most of the money is wasted.

  3. Jane–
    As Schwitzer makes clear,no one is telling you “don’t have a mammogram.” He just wants to be sure that you are fully aware of the potential risks–which for some women, outweigh potential benefits.

  4. As I’ve been arguing for some time, I’m very optimistic about the potential for value based insurance design – tiered networks and narrow networks to bend the medical cost growth curve over time. At a recent conference, one of the speakers estimated that 12% of employers currently offer employees a version of VBID. Moreover, in a recent meeting with investors, Karen Ignagni, CEO of America’s Health Insurance Plans (AHIP), noted that in contrast to the managed care heyday in the early to mid-1990’s, insurers now have a host of analytics tools to help them better evaluate provider cost and quality that simply did not exist 15-20 years ago.
    In certain parts of healthcare, including diagnostic imaging, drugs seen advertised on TV, and end of life care, patient demands and expectations can help to drive up costs. Defensive medicine is a contributing factor as well though some of it can be rationalized as trying to satisfy patient expectations while doing more happens to pay more under a fee for service payment model.
    Having said all that, I see three distinct sets of issues that impact the relative cost of hospital care, physician care and prescription drugs in the U.S. vs. other developed countries. First, regarding hospitals, I have never seen a definitive cost comparison of what it costs to operate a standard licensed bed or an ICU bed in the U.S. vs. Europe and Canada. When the patient comes to the hospital for a surgical procedure like a hip replacement or a CABG, prices for such procedures are far higher in the U.S. than in other countries. Yet, outcomes are similar, there are probably about the same number of people in the OR to perform the procedure and recovery times are presumably similar. Aside from doctors, the difference in pay for all other hospital employees is probably not much different here vs. elsewhere. Labor costs are far and away the most significant cost of operating a hospital. While amenities are a factor driving up costs, I doubt that they’re a significant factor. Any analysis, however, also has to be careful to reflect differences in how hospitals are paid. In Switzerland, for example, a significant portion of hospital operating costs are paid for with general tax revenue which significantly reduces the price the hospitals need to charge insurers and patients for care provided.
    Physicians, by contrast, do earn considerably more money than their counterparts in other countries. Putting the issue of medical school debt aside which varies widely among new doctors, medical malpractice premiums are more expensive in the U.S. than elsewhere, especially for surgical specialties. Administrative complexity is also an issue, especially for primary care (as a percentage of practice revenue) which means they need more office staff to support their practice than is the case in Europe, Canada, etc. Consolidation among insurers and simplification and standardization of offerings, especially starting in 2014, should help to mitigate this issue.
    Finally, in the case of prescription drugs, the marginal cost to produce traditional chemical compounds (pills) is tiny, often measured literally in pennies. Thus, the drug industry is often willing to sell drugs cheaper in other countries because the price paid is still far above the marginal cost of producing them which contributes significantly to profits. In effect, however, other countries are free riding on U.S. R&D and, in the case of drugs developed overseas, the higher prices that can be charged to U.S. patients. If CMS wants lower drug costs and wants the right to negotiate with drug companies, it will need to be prepared to keep drugs off its formulary or at least relegate them to a lower tier (much higher co-pay required). They can’t just dictate prices like they do to hospitals and doctors. It would remain to be seen how acceptable this would be to elderly patients.

  5. Maggie,
    Remember the point of your post is how to lower costs so providers don’t get what they get today both in terms of total amounts and in terms of what procedures they get paid for. A single payer could accomplish this while I have problems seeing any market type forces doing this in an effective equitable manner.Remember that if following the leader by having every payer just equal Medicare, well that is very similar to a single payer in principle to me.
    As for the idea of an authority running healthcare, it is the public health decisions of what to cover and how much to pay that should be delegated to such a body. The actual funding mechanism would have to be worked out in the best manner possible trying to use taxes with minimal politics. I agree this will not come easily, but I just see no other effective way to break the current gridlock for the type of system you (and I) want.

  6. NG–
    First, countries in Europe that don’t have single-payer have bettter health care than in Canada & UK (in terms of outcomes.)
    Somehow, single-payer advocates refuse to face up to this fact.
    Secondly: The majority of Americans don’t want single-payer for many reasons. It’s just not
    happening any time in the near future. Clinging to the idea takes up time and energy that could be used to improve the health care reform that we are engaged in now.
    Third– private sector insurers can and do add value. Many non-profits have added much value. (Kaiser greatly reducing heart disease in Northern California, Geisinger improving collaboration with “bundled” payments, Peugot Sound improving primary, INtermountain reducing C-section rates, care etc. etc. et.c
    And Aetna, one of the biggest for-profits pioneered letting people have hospice care while also continuing medications designed to keep them alive longer. The patients actually lived longer, and the costs were lower. Higher patient satisfaction. Dying with hospice care is greatly preferable to dying in an ICU.
    Medicare, by contrast, won’t pay for Hospice unless patients “give up” (no more treatment aimed at saving or prolonging life) and those patients must be very close to death.
    We don’t even know if palliative or hospice care will be included in “essential benefits” that must be covered under reform. If we had a single-payer system, a great many voters would be
    against covering palliative and hospice care.
    Medicare isn’t as flexible as private insurers, in part because some decisions(particiularly anything to do with end-of-life, or abortion) are politically very sensitive.
    Large numbers of voters have very strong (and sometimes irrational) opinions on these issues. And again, this is a democracy. Majority rules.
    Medicare didn’t even have a billing code for palliative care until last fall. Palliative care specialists had to bill as primary care docs or geriatricians (very low fees for both.)
    Read Naomi’s post on abortion. This is the country we live in. These are the politicians that the majority of Americans has elected in a great many states.
    They Don’t Want a Panel of Public Health Experts running health care.You and I might think that this would be a sensible idea. But Many Americans Hate Experts. (This country has a long history of anti-intellectualism.–dislike for “egg-heads” of all kinds.)
    NG– You don’t seem to realize that at this point in American history you are part of a minority.
    Over time, it is conceivable that the country will move in a more progressive direction.
    But given the state of the economy it is also conceivable that Obama will not be re-elected and that conservatives will take over the Senate.
    Unemployment is not going down anytime soon. When it comes to the economy, the president has listened to the wrong advisers.
    If we had single-payer, the first thing a conservative govt would do is to repeal it-or defund it—with the blessing of the majority of Americans. There is no law that could prevent this.
    When government runs healthcare, the majority of voters decide what healthcare can and cannot do.
    When there are alternatives to government-run health care, you and I are not limited to the heallth care that the majority approves.
    Private sector insurers are much freer to experiment. Private sector insurers can cover abortions if they want to. (Many do.)
    In the U.S., a single-payer system will never cover abortion. In the current political enviroment, single-payer would disriminate against immigrants–including legal immigrants. In the current political environment it will continue to over-pay drug-makers, device-makers and many very,
    very powerful hospitals. In the current political enviroment it will continue to discriminate against nurse-practioners, midwives, and other non-M.D. medical professionals.
    The current health reform law takes some impt. steps toward reducing the amount of power that Congress has over health care, but
    certain things couldn’t–and won’t–make it through Congress.
    Ideally, we will ultimatelyl add a public option to the current reform proposal. If people like it, they’ll sign up for it–and more healthcare will be run by the govt.

  7. It’s important to remember that doctors only get a small percentage of the 85% that is going to “providers.” The lion’s share of this is going to hospitals that have negociated payments (including facility fees) that are out of touch with reality.

  8. pcp–
    Actually, 21% of total health care dollars go to physicians; 31% goes to hospitals –though a good chunk of the 31% hospitals receive actuallly goes to device makers and drug makers to pay for the often extremely expensive drugs administered in a hospital (chemo, etc.) as well as all of the devices used in a hospital (artifical knees, hips, heart devices, stents, etc. etc. that show up on your hospital bill.
    After you subtract the drugs and devices, perhaps 25% to 26% of health care dollars go to hospitals.
    Just as some hospitals recieve exorbitantly high payments, physicians is some specialities also receive excessively high paymentsw. (I once asked an eye surgeon how he chose his specialty, and he repllied: “What are your eyes worth?” In other words, he realized that there was no limit on what he could charge.
    See this Kaiser Health News column on how the RUC
    sets rates, favoring specialists. http://www.kaiserhealthnews.org/Columns/2011/January/012111kepplerkibbe.aspx
    I would add only that if you look closely at the chartiin the column you will see that the median income for primary care physicians is $175,000. This means that half earn less than $175,000, half earn more.
    I would suggest that
    many of the half who earn less than $175,000 are undepaid –especially if they are young PCPs trying to pay off tens of thousands in med school loans.
    On the other hand, the half who are earning over $175,000 are pretty well-paid–especially if they work for a large organization,or medical center which pays the overhead (staff, billing, real estate and malpractice insurance.)
    The Kaiser column argues that all PCP’s need mroe than the 10% pay hike that they are getting under reform legislation; I would suggest that some do, but that some don’t.
    For instance, at Kaiser Permanente, primary care salaries rarnge from $132,066 – $254,341. The doccs earning over $200,000, at a place where there overhead is paid for, probably don’t need more than a 10% raise. (see
    http://www.payscale.com/research/US/Certification=Board_Certified_Primary_Care/Salary.)

  9. Maggie,
    You have no idea. 200,000 is really not a lot of money. Any doctor making that amount of money needs a raise of at least 25% or more. Why is it you have such a hard time with doctors making money, but you leave out all those other professions that make way more than 200,000?
    Middle managers can make 200,000 easily. Accountants, lawyers, realtors, any number of business owner, on and on.

  10. Maggie,
    if you are going to deduct overhead (devices and pharm) you should do the same for physicians which is typically 40-50% in most offices. So actually only 11-12% of healthcare dollars are spent on physician pay. Take it further, they pay taxes so the government will get 30-50% of that back. You wont get anything back from a nonprofit hospital. They don’t pay taxes. So in reality you are talking about 6-8% of spending that goes into a physicians bank account. Nice try though at 21%.
    Peter,
    You don’t demonize who is on your side, which is why you won’t hear a word here about overpaid celebrities or athletes either,and their dubious contributions to society for their amount of compensation, because they are on the “correct” team.

  11. Jenga–
    Your comment is extremely mileading.
    Obviously, hospitals have all of the overhead ccost that docs do– the expense of real estate, utilities, paying staff, malpractice insurance — etc. etc. etc.
    The big difference is that most doctors (with the exception of oncologists) do not pay out a large amount of their income to
    drug-makers and device-makers.
    Hospitals do. Also, hospitals pay out a much larger share of their revenues for medical equipment.
    Thus,hospitals wind up keeping an equal or smaller share of our healthcare dollars.
    As for athletes, the average athlete is paid handsomely in part because his career is limited. (Few major athletes can work past age 40 or 45. Most doctors work until they are at least in the 60s–often much, much longer.
    And Americans CHOOSE to pay celebrities huge sums because they seem to derive enormous pleasure from their performances and existence.
    So Americans are willing to pay large sums for tickets to sporting events, rock concerts, even movies.
    But the amoutn they pay is Voluntary. No one Must
    attend a football game or
    concert.
    The fees they pay for medical care, on the other hand, are not voluntary.
    Drug-makers, hospitals–and yes, some doctors– have a gun to their head.
    Either die (suffer, become disabled)– or pay what I demand!
    Some doctors ask for very reasonable fees–and also take Medicaid patients and others who cannot pay their full bill because they are professionals and put patients’ interests ahead of their own financial interests.
    Others do not.

  12. If you want to focus on what drives the cost of health INSURANCE, most insurers will tell you that their claims costs fall into three main buckets as follows: 40% for hospital inpatient and outpatient services; 40% for physician fees, labs, imaging, rehab, etc.; and 20% for prescription drugs.
    There are large categories national spending for healthcare that are not included in medical claims paid by insurers. These include: R&D, public health initiatives, dental and vision expenses (sometimes covered by separate policies), long term custodial care and home health care, patients’ out-of-pocket expenses and administrative costs.

  13. Maggie and Jenga –
    You are both right. The figure of 21% of health care costs going to physicians is correct, but as Jenga says the average physician has overhead — office costs, equipment, staff, and billing expenses — that accounts for more than half of that income on average and is actually paid to other people. That varies a lot from practice to practice and specialty to specialty: as a private diagnostic radiologist who did not own any equipment or have an office my overhead was less than 10%, but my brother the orthopedist, who owns equipment and has an office, spends about 55% of his income on overhead.
    Of special note in this is the fact that most receipts of large medical groups like Mayo and so on and of HMO’s like Kaiser that are paid for outpatient care and for physician components of hospital care are counted as payments to physicians, although many physicians working for those organizations actually receive only about 25-30% of that as income.
    In the end, Jenga’s point that physicians actually receive less than 10% of all health care costs as personal income is right. In fact, a few years ago I saw a discussion that pegged that number at about 7.5% of total health costs, and made the point that if physicians were paid nothing for their services at all the savings would be erased in less than a year and a half of typical health care inflation.
    Although physicians’ personal income accounts for a fairly small part of health care costs, physicians control a much larger portion of health care costs by the decisions they make in managing patients. It is by inducing American physicians to make more rational decisions about patient management, some of which would in fact reduce their own incomes and much of which would reduce the income of hospitals and clinics, that the US could attain much more significant savings.
    We need to keep returning to the idea of “watch the donut, not the hole” in health care policy. It is easy to get side tracked in health care discussions at tilting at windmills that offer relatively little bang for the buck, like doctors’ incomes and insurance company profits, while ignoring the much more difficult and — thanks to our friends in the Tea Party — more controversial issue of making more rational decisions about how health care is managed and tackling the 30% or more of the US health care budget that is wasted on ineffective and sometimes actually harmful practice patterns. However, if we are going to preserve health care for the majority of Americans and actually improve health care quality while preventing it from destroying the economy, we have to follow the Willie Sutton rule and go where the money is.
    As far as doctors’ incomes are concerned, the bigger problem is the allocation of income between highly paid specialists and the much lower paid primary care physicians and other providers. A proposal to keep the total payments to doctors relatively level while reallocating a much larger share of that income to primary care providers could have a positive impact on health care, mostly by incentives to students to choose primary care more frequently and fill the many positions that the country will need to offer health care to people now excluded from the system and to our growing elderly population.

  14. Maggie,
    You think it’s misleading, but you didn’t dispute a single number.  I think it’s misleading to state that 21% goes entirely to physicians.  It was only a response to you trying to drill down on the hospital numbers, but purposely leaving the physician numbers alone.
    Looks likes we are talking alot about choice here. You stated that people choose to pay to go to a football stadium or concert as if the transaction is entirely private.  That’s misleading. It doesn’t take into account the public financing of stadiums on the backs of those that might not choose the revenue to go to a athlete or celebrity. But they are getting taxpayer funded breaks by playing in a publically financed stadium of which some of those benefits end up paying for their salaries or tax perks for Movie productions. I would like to see the societal benefit of paying someone like Steve Francis 18 million NOT to play a game or Raef Lafrenz 9 million NOT to play a game.  You act as if athletes are unemployable once they hit 40, there are many other areas they can instantly have a job in.  The often choose not to because they can.
    Hospitals Choose to pay for ever expensive medical equipment and drugs.  That is their choice.  They can simply refuse or negotiate with single vendor or offer generic only drugs.  It is their choice to buy a diVinci robot, 64 slice CT, etc. or amenities that you have written articles about, marble floors, 3 story water falls, flat screen TVs, choice, choice, choice.  Most see it as a price of doing business, but that is their choice and contributes to their overhead.
    Americans choose their lifestyle, what to eat, how active they are, if they smoke, drugs they use, how fast they drive, if they wear a helmet, etc which ultimately are the biggest factor in illness in the US.  There is no dispute to that. Alot of these decisions are entirely voluntary.
    I know you have a problem with a neurosurgeon making 450,000, but I haven’t heard you mention a word about Donald Berwick making twice as much with none of the risk involved.  There is a right team wrong team component to your views on who gets an “acceptable” salary, determined by who is on “your side”.

  15. I thought celebrities, athletes, musicians etc. were professionals as well Maggie. And what does being a professional have to do with do getting paid. Ask the above members of our society to do what they do for free (or reduced price) and see how far you get.
    It seems to me that your priorities are screwed up.

  16. Pat S.—
    What you say is correct.
    But the fact is that at Kaiser, primary care docs earn an average (median) of $190,000 and pay ranges from $136,000 to $254,000.
    They are not getting some percentage of this; they are getting the full amount. And they have no overhead.
    I’m told Kaiser pays a little above average, so this gives us a feel for a primary care docs take-home pay. (If the average primary care doc was taking home only $150,000 then Kaiser wouldn’t be pay primary care docs an average (median) of $190,000–it wouldn’t have to.)
    This conversation about pay began when I suggested that for PCPs at the high end (earnign $200,000 to $250,000) the 10% increase in the reform bill seems sufficient..
    Peter suggested that a doctor making $200,000 needs a raise of 25%.
    That means paying every primary care doctor in this pay range another $50,000 a year (plus inflation)going forward, indefinitely.
    Who would pay? Much of that money would be coming from taxpayers who will be paying the subsidies for the middle-class and low-income workers so that they can afford insurance. Tax payers also fund Medicare, Medicaid, SCHIP,
    &insurance for government employess. . . which equals far more than 50% of the nation’s total health care bill.
    Why should Americans earning a median household income (joint) of roughly $60,000 pay to make certain that that docs now earning “only” $200,000 earn $250,000? (For that matter, why should famiilies earning $100,000 finance that 25% pay hike?)
    (Pat, I understand that you would like to take the pay hikes for primary care docs out of specialists’ salaries, but if we built a sudden 25% hike into the reform bill, it is unrealistic to expect that we could slash specialists’ salaries by that amount.)
    Moving on to your next point: Pat,you suggest that we need to hike pay for primary care docs because we don’t have enough of them.
    Unfortunately, research shows that when you try to increase the number of primary care docs, they all flock to the same places where we already have enough of them: Boston, Manhattan, Miami, etc.
    People in those cities say they have a hard time getting appointments,but recent research shows that acccess to primary care does not always correlate with the number of primary care docs in an area.(Often, when there are more PCPs, they see their regular patients more often, but aren’t taking new patients.)
    Insofar as we need more primary care docs, we need them in the places that most PCPs don’t want to work: low-income areas of rural America and inner-city ghettos.
    Dr. John Stobo, senior vice-president for health and health services at the University of California, suggests that in order to increase the number of doctors in these areas, we need to increase the number of low-income students admitted to medical schools (people coming from families who earn less than joint median income of roughly $60,000).
    The way to do that is to lower the bar slightly in terms of MCAT scores –which we know discriminate against kids from low-income families. Resarach also shows that when these kids are admitted to med school, their clinical skills are as good as students from more affluent famlies.
    I’ve written about this here http://www.healthbeatblog.com/2009/05/reinventing-the-way-we-train-doctors-and-nurses-.html See everything under the sub-head “Changing the Way Medical Schools Assess Students.”
    Not all students coming from low-income families will want to work in these underserved areas, but the studies reveal that many choose to work in an area much like the place where they grew up. The stats show that very few kids from affluent backgrounds feel comfortable in– or want to work in– these areas.
    And from the point of view of someone coming from a family that earned $30,000, $200,000 is sufficient pay–especially if they have no loans when they get out of med school.
    Under health reform, we are greatly expanding scholarships and loans that you don’t have to pay back if you work in underserved areas.
    And, as you know, we need more doctors who speak the language of their patients and reflect the diversity of the U.S. popoulation. AGain, see my post http://www.healthbeatblog.com/2009/05/reinventing-the-way-we-train-doctors-and-nurses-.html
    Much of the disparity in the care that minorities receive is tied to bad communication, lack of trust on both sides, etc.
    So by admitting more low-income kids to medical school, we could begin to solve more than one problem.
    By contrast, if we simply hiked primary care pay by 25%, so that docs at the high end could look foward to earning $250,000 to roughly $300,000 (rather than $200,000 to $250,000)
    we might succeed in attracting more kids like Peter and Jenga, who don’t think that $200,000 is enough to live on (or who spend a lot of time worrying about how much athletes make)–but even then, they wouldn’t want to work in the Bronx or rural Mississippi.
    One reason I object to 25% pay hikes for docs making $250,000–even if we took the money out of specialists salaries–is because it would tend to attract doctors who are fixated on the money–and may put their financial interests ahead of their patients’ interests.
    Saying that docs earning $200,000 to $250,000 need a 25% pay hike suggests that medicine is all about money, that the only way to attract more doctors is to make sure that they earn more than 97% or 98% of all other Americans.
    You wind up with an elite class of physicians who, in too many cases, chose the profession for all of the wrong reasons.
    Finally, as we expand the number of nurse practioners in the system (and the reform legislation does that by greatly increasing scholarships and loans for nurses as well as salaries for nursing school teachers) it’s not clear that we will need more primary care docs.
    When primary care docs and nurse-practioners work together, they can see many more patients–and spend more time with those patients.
    It will take a while for Americans to become accustomed to receiving more of their primary care from nurse practioners, but it’s happening.
    I did an hour long radio show on NPR in Miami a couple of days ago, and one of the callers was retiree who said that he a got all of his primary care from a nurse-practioner, and was very happpy with her. . .
    As I’ve mentioned in the past, nurse practioners now provide most of the primary care at many universities, which means that younger people are getting acclimated to the idea. ..

  17. Peter (your most recent comment)
    I guess you never took the medical ethics course in med school.
    By definition, a “professional” is someone who puts his patient’s (or client’s) interests ahead of his own interests–including his financial interests.
    And as you know there are good professional athletes who play in bush leagues for little money because they love the sport.
    The whole idea is that professional are invested in what they do, for its own sake, and aren’t just
    working for the money.
    I don’t think I’m the one with “screwed up values.”

  18. Peter–
    You write: “You have no idea. 200,000 is really not a lot of money. Any doctor making that amount of money needs a raise of at least 25% or more. Why is it you have such a hard time with doctors making money . . .?”
    I have answered this question before, but let me take another stab at it, and see if I can answer it fully once and for all.
    I don’t have a problem with doctors, or businessmen, or others making $200,000. I have friends who earn more than $200,000, jointly.
    But if we want to offer health care to everyone, we need to keep a lid on health care inflation. It’s the growth of health care costs –in all areas– that is undermining the economy. Tax payers just cannot afford to let the cost of care equal 20% of GDP.
    This is why I suggested that primary care physicians who make $200,000 to $250,000 at Kaiser (with no expenses that they have to pay out of that amount) don’t need a 25% raise. For those in that pay range, the 10% pay hike in the reform bill would seem sufficient .
    In Western Europe, and in the other developed countries that have decided that they want to provide health care for everyone, physicians (including primary care physicians) are paid significantly less–even after adjusting for differences in cost of living.
    I realize that in these countries med student don’t graduate with huge loans. As I have said many times in the past, I think we should subsidize med school tuition; after years of education, young doctors should not graduate with tens of thousands in loans–particularly not PCPs who may start out making $110,000.
    Subsidizing tuition would cost us much less than paying every PCP who now earns $200,000 an extra $50,000 a year , year after year. I also doubt that we would succeed in attracting new PCPs who would want to work in the underserved areas where we need them. (See my reply to Pat S.)
    As for how much $200,000 “is.” Money is relative. If many of your friends earn $300,000 to $600,000, and you feel a great need to “keep up with the Joneses,” $200,000 may seem like “not that much.”
    But let’s put that sum in context: the fact is that an individual who earns $200,000 earns more than roughly 97 to 98% of all Americans households. (Only the top 5% of all households earn more than $177,000–joint.) If that individual has a spouse who also works, earning, say $150,000, their joint income of $350,000 puts them close to the top 1% to 2%. (In 2007, households earning over $400,0000 were in the top 1%.
    Do you really feel that you need to earn more than 98% to 99% of your fellow Americans to enjoy what you consider a reasonable lifestyle? Do you really feel that its’ fair for that 98% to 99% to subsidize your lifestyle–even when many of them cannot afford decent housing, a college education for their children, etc? (Note: those in the top 1% pay a smaller share of their income in federal state and local taxes than those below them on the income ladder.)
    If $200,000 isn’t a lot of money– what is?
    Should we raise taxes on people earning $100,000 so that physicians who now earn $200,000 can earn $250,000 ? Should we take the money out of education–making this country even less competitive than it is now? There is only so much wealth in the economy.
    Finally my household income is much less than $200,000, yet we live well on NYC’s upper-west side in a fabulous apt. that we renovated over a period of years with great views (sky, river, sunsets and the city) terraces (where I grow roses, iris, blueberries . . .) I can buy most of the things I want –and everything I truly need. When I was raising my kids, they had everything they needed and went to excellent public schools in Manhattan.(I picked the neighborhood based on the schools.)
    I don’t mean to suggest how others should spend their money, or where they should economize. (Everyone has different tastes, wants and needs. I need sunlight and roses.)
    I’m just trying to explain that a person can create a very comfortable life, surrounded by beautiful things, while earning less than $200,000 (joint income.)
    If I can do that in Manhattan, I can’t figure out why you can’t do it in some other part of the country. Perhaps your wants are simply greater than mine. Or my imagination is limited.
    Or perhaps you feel you must have everything that anyone else has–whether or not it gives you great pleasure.
    In that case, your need for a higher salary is all about status–not about enjoying life. You might enjoy life more if you needed less.
    I realizing I’m preaching–and not to the choir. But I am really tired of hearing people say that “$200,000” isn’t that much money.

  19. Peter–
    You write: “You have no idea. 200,000 is really not a lot of money. Any doctor making that amount of money needs a raise of at least 25% or more. Why is it you have such a hard time with doctors making money . . .?”
    I have answered this question before, but let me take another stab at it, and see if I can answer it fully once and for all.
    I don’t have a problem with doctors, or businessmen, or others making $200,000. I have friends who earn more than $200,000, jointly.
    But if we want to offer health care to everyone, we need to keep a lid on health care inflation. It’s the growth of health care costs –in all areas– that is undermining the economy. Tax payers just cannot afford to let the cost of care equal 20% of GDP.
    This is why I suggested that primary care physicians who make $200,000 to $250,000 at Kaiser (with no expenses that they have to pay out of that amount) don’t need a 25% raise. For those in that pay range, the 10% pay hike in the reform bill would seem sufficient .
    In Western Europe, and in the other developed countries that have decided that they want to provide health care for everyone, physicians (including primary care physicians) are paid significantly less–even after adjusting for differences in cost of living.
    I realize that in these countries med student don’t graduate with huge loans. As I have said many times in the past, I think we should subsidize med school tuition; after years of education, young doctors should not graduate with tens of thousands in loans–particularly not PCPs who may start out making $110,000.
    Subsidizing tuition would cost us much less than paying every PCP who now earns $200,000 an extra $50,000 a year , year after year. I also doubt that we would succeed in attracting new PCPs who would want to work in the underserved areas where we need them. (See my reply to Pat S.)
    As for how much $200,000 “is.” Money is relative. If many of your friends earn $300,000 to $600,000, and you feel a great need to “keep up with the Joneses,” $200,000 may seem like “not that much.”
    But let’s put that sum in context: the fact is that an individual who earns $200,000 earns more than roughly 97 to 98% of all Americans households. (Only the top 5% of all households earn more than $177,000–joint.) If that individual has a spouse who also works, earning, say $150,000, their joint income of $350,000 puts them close to the top 1% to 2%. (In 2007, households earning over $400,0000 were in the top 1%.
    Do you really feel that you need to earn more than 98% to 99% of your fellow Americans to enjoy what you consider a reasonable lifestyle? Do you really feel that its’ fair for that 98% to 99% to subsidize your lifestyle–even when many of them cannot afford decent housing, a college education for their children, etc? (Note: those in the top 1% pay a smaller share of their income in federal state and local taxes than those below them on the income ladder.)
    If $200,000 isn’t a lot of money– what is?
    Should we raise taxes on people earning $100,000 so that physicians who now earn $200,000 can earn $250,000 ? Should we take the money out of education–making this country even less competitive than it is now? There is only so much wealth in the economy.
    Finally my household income is much less than $200,000, yet we live well on NYC’s upper-west side in a fabulous apt. that we renovated over a period of years with great views (sky, river, sunsets and the city) terraces (where I grow roses, iris, blueberries . . .) I can buy most of the things I want –and everything I truly need. When I was raising my kids, they had everything they needed and went to excellent public schools in Manhattan.(I picked the neighborhood based on the schools.)
    I don’t mean to suggest how others should spend their money, or where they should economize. (Everyone has different tastes, wants and needs. I need sunlight and roses.)
    I’m just trying to explain that a person can create a very comfortable life, surrounded by beautiful things, while earning less than $200,000 (joint income.)
    If I can do that in Manhattan, I can’t figure out why you can’t do it in some other part of the country. Perhaps your wants are simply greater than mine. Or my imagination is limited.
    Or perhaps you feel you must have everything that anyone else has–whether or not it gives you great pleasure.
    In that case, your need for a higher salary is all about status–not about enjoying life. You might enjoy life more if you needed less.
    I realizing I’m preaching–and not to the choir. But I am really tired of hearing people say that “$200,000” isn’t that much money.

  20. If you consider how many years of schooling and post medical school training it takes to become a primary care doctor, I don’t think it’s unreasonable for them to expect to be paid well by national standards. They know they can’t expect to make as much as many on Wall Street make and that’s OK. The question, of course, is what’s reasonable?
    Personally, I think $200-$250K for a primary care doctor is reasonable. I think there are strategies that could free up money to pay them that much without increasing overall healthcare costs. Such strategies include (1) tort reform to reduce defensive medicine, (2) allowing NP’s to practice at the top of their license, and (3) building organizations where PCP’s are expected to know and care about costs and to follow evidence based guidelines where they exist. This means referring patients to the most cost-effective hospitals and specialists. It means prescribing generic drugs instead of brand name drugs whenever possible. It means not bringing patients back for screening tests and checkups more often than necessary. There are huge costs elsewhere in the system that PCP’s could help to reduce or eliminate. With the resources freed up by more cost-effective practice and referral patterns, we could afford to pay them significantly more and still reduce total healthcare costs.

  21. Barry–
    I agree.
    My point is simply that
    a large share of PCPs are
    earning what you suggest (200,000 to $250,000
    See the numbers on pay at Kaiser. There, median pay for a PCP is $190,000— half earn more than that.
    And they have no overhead expenses.
    I’m told that Kaiser pays slightly above average– so the fact that they pay half of their PCPs more than $190,000–with the best-paid earning a little over $250,000– tells us that a fair share of PCPs working elsewhere are taking home roughly $170 — $230.
    If they weren’t, Kaiser wouldn’t be paying so much. It wouldn’t have to.
    (If the average (median) PCP was taking home $140,000, Kaiser might
    pay $155,0oo– not $190.000
    The problem is the other half of PCPs– those earning less than median PCP income.
    Some of them are earning $110,000– or less. Young PCPs with loans are often struggling, as are experienced PCPs who take a large number of Medicaid patients, or work in areas where many patients can’t pay.
    These are the docs who need raises. The 105 hike from $110,000 to $121000 isn’t enough.
    But we need to differentate between the half who are, by and large,underpaid, and the half that are pretty well paid. We tend to lump all PCPs together–which is a mistake.

  22. Maggie brings up some excellent points when comparing a $200,000 income to the average household.
    This is reflected in premiums insurers have to charge, when including all the other expensive costs.
    A friend of mine has prostate cancer.
    He told me that 11 chemotherapy treatments cost $264,000.
    We are at a tipping point here in health care. The status quo has to change, soon, and in a big way.
    The median household income is $50,000. The median fanily group premium is $13,000.
    This is a bubble which has to burst.
    Let’s get it over with already!
    Don Levit

  23. Maggie –
    I was responding to your and Jenga’s exchange, not to the exchange with Peter.
    Yes, Kaiser does pay up to $200,000 for primary care people — although that varies a bit depending on their perception of what the market is in each service area. My point was, however, that Kaiser’s collections for “physician services” is added into the total of health care money paid for physicians, but that due to overhead considerations a large part of that is retained by Kaiser for expenses other than doctors’ incomes. This applies to almost any doctor in the country, so that while the figure for money paid to doctors is correct at 21% of health care costs, the amount for money that ends up in doctors’ take home pay is much less — less than half that.
    It is also important to note that the same Kaiser units paying $200,000 for primary care are paying $500,000 for doctors in higher paid specialties, so that while primary care doctors are in no danger of starving, there is still a huge premium for some specialties. I agree that this cannot be undone overnight, but do believe that partly diminishing that difference will, in the long run, increase numbers of doctors who choose primary care. This is clearly working in Britain and Japan, where primary care doctors often make more than specialists, and where — at least in Japan — specialists are actually leaving their specialties to practice primary care.
    As to distribution of primary care doctors — much of the maldistribution is due to shortages still. Doctors, contrary to some opinion, do respond roughly to financial incentives in seeking work. For most of my career, there was a national shortage of diagnostic radiologists, and recruiting diagnositic radiologists to live in the Upper Midwest — land of cold winters and farms — was very hard except for doctors who were raised in the area. In the last few years, the supply and demand situation for radiology has flipped, with more job seekers than jobs. Suddenly it is easy to find radiologists for the Midwest, and jobs that have been unfilled for 10 years are suddenly filled.
    It is true that some doctors in some specialties will still locate in areas with too many doctors, and seek to increase their income by churning their lists or by providing services that are questionable. But the laws of supply and demand do still apply, and in times of high levels of supply there will be doctors who move to areas that are underserved.
    It is also true, as you said and as I alluded to above, that choosing medical students who come from some backgrounds — people raised in the areas of need, people from less well educated and less wealthy families, and people from minority backgrounds — will help in recruiting doctors to fill jobs in areas of need matched to the students’ background. The University of Minnesota Duluth runs a two year medical school program, and emphasizes recruitment from candidates who come from rural and semi-rural Northern and Western Minnesota, as well as Native Americans. They have been very successful in producing doctors who go into primary care and choose to practice in the target area of rural Minnesota, Wisconsin, and North and South Dakota.
    Finally, I agree that use of nurse practitioners can be very useful in dealing with primary care shortages. I have worked with many excellent nurse practitioners (again, doctor shortages in my area,) and have a high level of respect for them. Nurse practitioners are also beginning to be paid salaries high enough so that they are not better off getting jobs as ICU nurses, who used to make up to 50% more than NP’s in our area. The one big barrier to training of large numbers of NP’s, at least in the Midwest, is the fairly low salaries paid to nurses who work training nurses in academic settings, making it difficult to lure academic staff out of clinical positions into the academic setting.

  24. Pat S.
    Kaiser pays primary care docs up to $250,0000–not $200,000.
    In an accountable care organization, there are bonuses for better outcomes that are paid to the team (bundled payments) not to individuals. This makes up for the fact that doctors will not be paid for volume. So docs working in ACOs will not, by and large be paid more than they made in the past (with the exception of primary care docs who were underpaid in the past.).
    Some speciailists who made money on doing a high volume of lucrative procedures will probably wind up making less.
    But working condition will be better: less frustrating, better-co-orindated care, more support, more regular hours.
    Geisinger is the model for ACOs. Primar Care Salaries at Geisinger appear to be comparable to Kaiser.
    Working conditions are better because primary care docs have nurse pracitoiners working with them who are paid a salary by Geisinger–this gives everyone more time to spend with patients.
    The group is eligible for bonuses. For example–one group of 52 primary care physicians received half of any money saved from preventing readmissionss to the hospital. (They were caring for 900 patients.)
    The bonus turned out to be
    $320,000 last year, which was divided among the whole staff–the 52 docs, the nurse practioners, even the receptionists. The reward was based, too, on various measures of the quality of care delivered.
    I’m guessing that worked out to an extra $10,000 to $15,000 per physician.
    In other settings, Geisinger physicians with high patient satisfaciton ratings and high scores on other quality measures are eligible for bonsues of $5-$10,000 (before taxes) after 6 months, after 12 months and after 18 months.
    Under Berwick, I think that Medicare is much more likely to pay bundled bonsues to teams of doctors, nurses , hospital rather than pay bonuses to individual physicians.
    On paying doctors bonuses, here is what Berwick says:
    (I’m quoting from a past post):
    “He is convinced that there are enough like-minded people within the health care professions to create a revolution:
    “The will to excellence is present everywhere in Health care,” Berwick told an audience at the National Forum on Quality Improvement in Health Care. “The will to do well, the quest for pride, the joy of achievement, the warmth of serving –these are natural capital, human traits. Not of all human nature, not all of the time, bu enough, plenty enough. We can waste them and deplete them,” he adds, referring to low morale in many parts of our health care system. “But the will to have pride in work is not scarce; it is everywhere abundant.”
    Time and again, Berwick has seen IHI’s pilot projects work –without any financial incentives for the medical professionals involved.
    Hospital workers want change. Many are horribly frustrated to find themselves laboring in an system where the left hand and the right hand often fail to communicate, making much of their work seem redundant or even pointless. Berwick recognizes that these professionals would like nothing more than to turn their hospitals into efficient workplaces. And that such an opportunity might well be worth more than a 2 percent raise.
    ***Indeed, a year ago at the American Medical Group Association meeting, Berwick compared physician performance bonuses to exhorting [doctors and nurses] “to do better,” and said both were “very poor cousins” to health care system redesign. As he told Kaiser HealthCare News in an interview today: “I think we need to create more consequences for good and bad performance. But we have to learn our way unto that. . .. The danger is that you create ‘games and gaming’—which we can ill afford.”
    In a 2005 interview published in Health Affairs, Berwick expressed his concerns: “I would draw a very dark line between the incentives that apply to organization . . . where I do want incentives in place — and incentives for individuals. . . . I want it to be good for an organization to be safe, and I want it to be good for an organization to manage chronic illness carefully . . .” He applauds the pilot projects in the health reform legislation that encourage Medicare to “bundle payments to doctors and hospitals,” with a bonus added to the bundle when teamwork leads to good outcomes at a lower price.
    But “at the individual level,” he insisted, I don’t trust incentives at all . . . I think it feels good to be a good doctor and better to be a better doctor. When we begin to attach dollar amounts to throughputs and individual pay, we are playing with fire. The first and most important effect may be to disassociate people from their work.”
    Here, I think Berwick is putting his finger on a potential problem in the current reform movement. Recently, I have talked to both doctors and nurses who were troubled by the new emphasis on “productivity” in organizations where they work. How many patients have you seen today? As Berwick put it in 2005, “We’ve got to support the underlying culture and the underlying system that makes healing, not scoring, the objective.” Today, he added, “we need to stop paying for through-put.”
    When I was writing Money-Driven Medicine, I discussed the issue of “pay-for-performance” (which is quite different from paying an organization for good outcomes) with former Medicare director Bruce Vladeck: “Quality and improvement strategies need to focus on reinforcing the norms and values of professional responsibility rather than on undermining them through the exercise of economic muscle,” Vladeck said. “Unless we can continue to assume that most providers and administrators want to do the right thing for most patients most of the time,” he added, “we are all sunk and no amount of economic incentives can salvage the situation.”
    Tapping into that underlying professionalism, Berwick has said, is “like drilling for oil. There is so much pent-up need in the health care work force that, even without financial incentives for individuals, health care workers are eager to make a change.”

  25. Maggie,
    320,000 divided by 52 is not 10,000. Then add in the nurses and secretaries and we have way below 10,000. FYI 320,000/52= 6153.85. Not much of a bonus. Sorry for the correction, but being a teacher………..well you know.
    Looks like GM line workers are doing a bit better bonus wise.

  26. Maggie –
    I agree that financial incentives should be based on performance of the system, not individual doctors, and did not intend to imply otherwise. That is what the A in ACO is all about — making systems accountable financially for success or failure of patient care practices. That is what Kaiser and other HMO’s with prospective payment systems are all about as well.
    From my own personal experience, I would say that people who are attracted to working at Kaiser and other large HMO’s or at large multispecialty systems — my experience is with large systems in the Upper Midwest — tend to be more interested in practicing in models that the systems use, otherwise they would be elsewhere. The big trick is going to be to get providers in places that are away from these high spots to adopt those models. It is still sadly true that Don Berwick, despite working there for twenty five years, has not been able to find enough “like minded” people in the Harvard affiliated health system to get the system to change away from practice patterns that Berwick’s own research and research from other reformers have shown to be both less effective and more costly.
    Call me a cynic, but in my opinion financial incentives, both carrots and sticks, from the government and other payers will have to play a role. If that were not true, many institutions would be very different already, since the sad thing about all this is that none of this is new news — these ideas or ones very like them have been on the shelf for decades, and systems using these principles have been turning in superior performances both in effectiveness of care and cost efficiency all that time without causing major patient management reform.
    The difference now is that this has all gone from an interesting intellectual challenge to a national emergency that threatens to destroy US health care and bury the economy. It is imperative that all players, especially the federal government, get busy fixing this now. As Paul Krugman noted recently, there are ten words that can sum up what needs to be fixed in the US economy and the federal budget. The first eight are “health care, health care, health care, health care.”

  27. Maggie –
    While I unfortunately can’t remember where I saw it, I recently read about an analysis of how 15 major clinics and healthcare systems around the country evaluate and compensate their doctors. The organizations included Mayo, Cleveland Clinic, Marshfield, Kaiser, Inter-Mountain, Geisinger, and nine others. In every organization, the doctors were salaried. In all but two, some form of “productivity” was used to evaluate physician performance and determine bonus compensation, if any. There were other factors that went into the equation as well. The only two organizations that did not use productivity metrics were Kaiser and Mayo.
    Regarding Medicare’s intent to move toward bundled payments to compensate doctors and hospitals, I think this makes perfect sense for surgical procedures. The approach is more problematic for other types of care including patients who come to the hospital repeatedly for severe mental illness or congestive heart failure. It also doesn’t work well for kidney dialysis or long term custodial care. Diagnostic testing to determine a patient’s problem, especially in a hospital setting, can also be costly. It’s hard to envision hospitals or doctors taking on the financial risks for care that is either highly uncertain as to cost (diagnostics and the needs of “frequent flyers”) or chronic conditions with known high costs like kidney dialysis and long term custodial care.
    The organizations you cite for providing cost-effective care such as Kaiser, Geisinger, etc., provide care for only a tiny percentage of the national patient population. Kaiser has something over 8 million members while Geisinger has about 300,000. Peugeot Sound has roundly 600,000. At the same time, as Pat noted, the culture of aggressive treatment is slow to change in Boston as well as NYC, DC, Miami, LA, Houston and many other places. For ACO’s to work as hoped, the financial incentives for providers will have to be consistent with cost control. This probably means a shared risk coupled with shared savings modified capitation model. I don’t think we can depend on physician altruism or professional pride to fix the system. If we could, it would have been fixed a long time ago.

  28. To: All Readers, Pat, Peter
    To All Raders:
    At The Century Foundation, we delete any comments that simply attack one of the bloggers (or readers who comment on the blog) without addressing the ssue at hand and Adding Significant Information to the debate. (If there is information in the comment, that will be saved.)
    Pat S.–
    First, thanks very much for your response.
    It strikes me as relevant that in the study you read, only Kaiser and the Mayo Clinic (two out of 15 institutions studied) did not use “productivity metrics” (which often means “how many patients can you see in a short period of time?”) to determine compensation.
    I see Kaiser and Mayo as models for what Don Berwick and Medicare are hoping to achieve under health care reform.
    At the same time, I agree with you that that “the Harvard affiliates” will not adopt this model anytime soon.
    As I have said in the past, health care reform (and Accountable Care Organizations) will work better in some parts of the country than in others.
    My guess is that the East Coast Corridor from Boston to D.C. will be the last place to change. (You can add Florida to that corridor.)
    The medical culture here (where I have lived for my entire life) is not, by and large, open to change. And I’m not just talking about doctors and hospitals. Patients here reject the Kaiser or Mayo model.
    But,even within this corridor, there are exceptions. See part 2 of my post on C-sections (which I plan to publish tomorrow.) Maimonides Medical Center, a huge teaching hospital in Brooklyn, has been bucking overtreatment for some time. And Maimonides is likely to become one of the new Accountable Care Organations that will appear under the Affordable Care Act.
    I think it’s improtant to recognize that this is a huge country, and in many towns and cities, reform is already beginning to take root.
    My guess is that we’ll see
    major changes in practice patterns in at least half of the country over the next five years.
    (Admittedly, my guess is optimistic, but given what you rightly describe as a national “emergency,” I think that optimism is the only constructive response to that emergency.
    I see no point in being pessimistic. The naysayers only reinforce the conventional wisdom that “the U.S. is different”– and thus we are either too greedy or too lacking in collective wisdom to create an affordabe health care system for all of our citizens.
    I’m not willing to acceptaht premise.

  29. Maggie and everyone –
    Although we have both posted on this issue, it was Barry Carol who referenced the data about pay patterns in health care systems.
    It does fit with what I know, especially about Mayo and other large systems.
    However, at least in the past, Kaiser has had an odd financial incentive program that rewards doctors based on the performance of the system as a whole, of the specific unit they work in, and of the specific department they work in. Of course, since Kaiser, being a prospective payment system, actually loses money on increases in volume of many types of services, the system does not reward increased volume of work/billing in normal sense, the metric most often tracked in the incentive programs in other systems. They have some sort of complex system that measures the financial health of the system/site/department as well as responses of patients, both in terms of data based on collecting patient feedback and of patient results from successfully managing health problems, of feedback from other providers within the system about how doctors and departments meet the needs of the system. Even my friend who has worked at Kaiser in the Bay Area for 30 years cannot explain how it works, but is aware of its effects. Of note, it seems to most directly effect contract offers for the next year, and has almost never resulted in “bonus” payments for the fiscal year ending, unlike the pattern in most other groups, where bonuses or arrangements that resemble bonuses are the rule.
    Kaiser does, therefore, have a system that partly uses payment as a way of manipulating doctor behavior to achieve system goals, just not one that looks like anyone else.
    Mayo, however, does base salary solely on what it perceives to be market conditions, offering salaries it thinks will recruit and retain doctors it wants. In recent times, Mayo salaries have risen markedly in response both to a need for many more doctors as the system expanded and to avoid loss of doctors leaving the system to seek higher incomes. Mayo, however, remains a unique culture, with its culture being the primary reason doctors work at Mayo.

  30. “I see Kaiser and Mayo as models for what Don Berwick and Medicare are hoping to achieve under health care reform.”
    Kaiser’s premiums are no lower than their competitors.
    Mayo is moving towards concierge care for their Medicare patients due to what they consider to be significant losses in caring for this population.
    Good models?

  31. pcp–
    Kaiser’s premiums are no lower in Northern California, but the quality of care is significantly better. People are getting VALUE for their money.
    See all of the data on how Kaiser reduced heart disease in NOrthern California. Its smoking cessation program has also been very good.
    Your statement about Mayo is simply wrong. Please check your facts (by Googling)- I hate to have misinformation spread vai HealthBeat. There is already so much misinformation about health care out there.
    Finally, on Kaiser, see this comment from a PCP at Kaiser. (This is a comment he made replying to a HealthBeat post that Kevin MD cross-posted on his blog.)
    “One of the best decisions I’ve made was joining Kaiser Permanente in Northern California in 2000, where primary care doctors are respected by colleagues and patients and the ability to achieve work-life balance is far better than many doctors in the community.
    But as this author correctly points out, it isn’t for everybody. All doctors must be willing to work collaboratively and since continual feedback exists, also willing to improve to provide members care that is increasingly more convenient and patient focused. . . .
    Replying to someone who worked at Kaiser 15 years ago, he adds:
    “The Kaiser Permanente of Northern California today is far different than the one you describe over 15 years ago. I have plenty of colleagues who were with the organization at that time and am very mindful of the challenges all of the doctors, including primary care doctors faced. . . . KP underwment a significant change in 1999. Only with this change could these types of articles appear in the NY Times in October 2004 (http://www.nytimes.com/2004/10/31/business/yourmoney/31hmo.html) or the Economist in April 2010 (http://www.economist.com/node/16009167).
    Again it isn’t for everybody, but for the thousands of doctors who work for the Permanente Medical Group (the MD part of KP, which incidentally is completely doctor-run) and the over 3 million members, it is one of the best places to provide and receive care.”

  32. My understanding is that one Mayo Clinic in Arizona is completely concierge-style for Medicare patients, and it is likely that others will follow.
    Have you ever looked at an EOB on a non-Medicare patient treated at Mayo? It’s an eye-opener.
    Please feel free to remove any parts of my previous post that you think were incorrect.
    Thanks

  33. As Pat notes regarding physician salaries at Mayo, at the end of the day, every organization needs to ensure competitive compensation if it wants to attract and retain qualified people. Those people need to be a good fit with the culture as well. I think there are probably at least several compensation arrangements and cultures that can provide good healthcare for a fair price. Transparency tools that can help patients and referring doctors to learn about both prices and outcomes at different hospitals and physician practices before services are rendered and even before an appointment is made would be very helpful, I think, in moving us toward ultimately paying for value and not just volume, market power or perceived reputation.

  34. The story of the Mayo concierge program has been exaggerated to death. There is one small family practice clinic in Arizona that is operating on a concierge model and does not take any insurance. It employs something like 5 doctors in a system that employs thousands. It is an experiment. So far it has not spread after two years, but who knows. Many other clinics have concierge sections, and Mayo wants to see what happens.
    In criticizing Mayo it is appropriate to note that Mayo does have relatively high charges for each individual service — higher, for example, than Mass General. However, as has been shown in numerous studies, the total charges for each patient at Mayo statistically are much lower for managing the same disease — again comparing with Mass General, about 30% lower. That is because of greater efficiency in finding the correct approach and avoiding extra costs. It would take a book to explain how that happens, but it is mostly related to 100 years of experience in group practice dedicated to making the correct diagnosis rapidly and treating quickly and correctly — after all, most of Mayo’s patients are visiting from some distance away.
    Mayo is also, like other high prestige centers like the Harvard affiliated programs, able to negotiate aggressively with private insurance payers, since for many of them it is crucial to have Mayo in their network in order to keep contracts. Most large organizations with strong market power think this is just good business, although it certainly adds to health care costs and ideally would not happen. Of course, on the flip side of this, private insurers have no problem with forcing smaller practices to accept whatever rate the company chooses since the small groups do not have the power to resist.
    Mayo does accept Medicare, and does accept Medicaid patients. They recently created another spate of publicity by announcing that they would stop accepting Medicaid from states other than the states where they have clinics — Minnesota, Iowa, Wisconsin, Arizona, and Florida. They report that they did that out of self defense, since many patients from other states were being referred to them by doctors and hospitals who did not wish to take on more Medicaid patients. There are very few practitioners and systems that can afford to become preferential centers for Medicaid patients, since Medicaid usually pays much less than other payers, often well under the actual cost of managing patients. Mayo, like most conscientious providers, does accept Medicaid patients from their own areas, but now does not accept patients coming from far afield.
    In analyzing what Mayo does compared with other centers, it is useful to reference the data collected by the Dartmouth group. Mayo is consistently an outlier at the good end of the graph, providing service for less money and with better outcomes than many other providers.
    One of the most dramatic illustrations of Mayo’s effectiveness, both in cost and patient care, is the data about its operation in Arizona. That region is one of the areas of the US where charges are most high and effectiveness most problematic, but in the face of this environment Mayo Scottsdale not only performs far better than its competition in Arizona, but slightly better than the main Mayo center in Minnesota. This is despite the handful of Mayo doctors there engaged in concierge practice.
    Mayo is of course not alone in this. Many other systems, most notably elsewhere in the Upper Midwest, but also the Cleveland Clinic, the Geisinger Clinic, InterMountain Clinic, and others have adopted models that emulate the Mayo model with equally good results.
    Looking at Kaiser is generally a little more difficult, because Kaiser is a prospective payment HMO, and as such does not generate bills in the normal way. Kaiser is competitive in cost AS AN INSURER with other programs in its various areas, and as Maggie noted provides better outcomes and superior service — usually with lower out of pocket for the patient than other insurance programs.
    In California, Kaiser has a large presence but has a lot of competition and does not dominate the market. However, to see the impact of Kaiser in a market where it is the dominant provider, it is interesting to examine Portland, OR, where Kaiser has very strong market position. Portland, interestingly, is one of the pockets in the country where (like Minnesota) care is significantly less costly and results are significantly better. There is no absolute proof of this, but it is my opinion — and I think it makes good sense — that it is the impact of Kaiser in Oregon and of Mayo in Minnesota that has created the medical culture that accounts for those results.
    When Senator Ted Kennedy was nearing the end of his life, he often commented that the greatest regret he had in his long career was that when Richard Nixon offered to create a national health program based on extending HMO’s specifically modeled on Kaiser to all Americans, Kennedy turned him down, wanting to hold out for a program modeled on Medicare. Kennedy said he wished he had taken that agreement, and that US health care and the people it serves would be much better off if he had. I agree with him.

  35. Pat and Barry
    Pat–
    You write:
    “As to distribution of primary care doctors — much of the maldistribution is due to shortages still. Doctors, contrary to some opinion, do respond roughly to financial incentives in seeking work. For most of my career, there was a national shortage of diagnostic radiologists, and recruiting diagnostic radiologists to live in the Upper Midwest — land of cold winters and farms — was very hard except for doctors who were raised in the area. In the last few years, the supply and demand situation for radiology has flipped, with more job seekers than jobs. Suddenly it is easy to find radiologists for the Midwest, and jobs that have been unfilled for 10 years are suddenly filled.”
    You add: “It is true that some doctors in some specialties will still locate in areas with too many doctors, and seek to increase their income by churning their lists or by providing services that are questionable. But the laws of supply and demand do still apply, and in times of high levels of supply there will be doctors who move to areas that are underserved.”
    Pat, you are talking about attracting doctors to the Mayo Clinic in Minnesota.
    I understand that Minnesota winters are not everyone’s cup of tea, but Mayo is still Mayo–
    a very rational place to work where a physician has incredible support services. Extremely prestigious. Interesting colleagues. An eight year stint at Mayo will look great on his resume for the rest of his life.
    Getting doctors to go to Mayo is very, very different from persuading young doctors from affluent famlies to work in Detroit or rural Alabama. They don’t want to raise their families there. They’re not familiar with the culture and know they would have a hard time dealing with their patients’ problems.
    They don’t want to deal with a patient population where a large share of their patients will be depressed,self-medicating (drugs, alcohol, etc.) and not very compliant.
    And most young doctors are from white families who are among the wealthiest 5 percent because, these days, students from poor and truly middle-class families are far less likely to go to the top-tier colleges that turn out graduates with stellar MCAT scores.
    Med school admisssion committess don’t really know what to make of a GPA of 3.9 from many CCNY colleges (public oolleges that are part of NYC’s university system)) –or a college they never heard of in Kentucky.
    Finally, even if they could get into med school, students from low-income or middle-class families (median joint income $59,000, before taxes) can’t even begin to think about taking on tens of thousands in debt.
    They don’t have an economic safety net (parents with money who could help them out if they ran into problems.)
    As for where young physicians from wealthy families are willing to work, even in NYC (where a doc could live in Manhattan and send his kids to private schools) very, very few are willing to got into private practice in the Bronx.
    When it comes to distribution of physicians, the laws of supply and demand don’t work. This is why we have way too many doctors in some areas (leading to overtreatment) and way too few doctors in “undesirable” areas.
    Pat, you and I do agree that we need more docs from lower-income and minority families who reflect the diversity of the patient population.
    I would add only that I’m not thinking of a two year medical training program in Minnesota (though I”m sure it
    is doing very good work).
    I’m thinking of more low-income med students going to Yale Med School (many poor patients in New Haven) Columbia, Chapel Hill, UCSF, etc.
    This would leave fewer slots for pre-meds from affluent families, and so it woud be controversial. (Especially among alums at these med schools.)
    But it is the only way to address the distribution problem as well as the disparity-of-care problem.
    A medical profession that represents the nation’s elite has a hard time relating to patients who live in a very, very different world.
    In some parts of the rural south, nurse-practioners work solo becuause doctors won’t go there.
    Going forward we really don’t need more primary care docs. (People at Dartmouth have done excellent research on this.)
    We do need more nurse-practioners–and under the reform law, we will have many more nurse-practiioners.
    You mention low pay for nursing school teachers–but under the Affordable Care Act, salaries for nursing school teachers are raised. And, rich scholarship and loan-forgiveness programs will create more nurse-practioners and more nursing school teachers (loans forgiven or greatly reduced if they choose teaching.)
    (There are just so many rich details in the Affordable Care Act that even well-informed people have never heard about. )
    As more people gain access to medical care, the nurse practioners will take up the slack. And, in some areas, they are much needed.
    Pat–I realize that we agree on this point– here I’m addressing other readers.
    In part 2 of my post on C-sections and inductions, I’ll discuss the fact that the hospitals with fewer elective C-sections and inductions are the hospitals that use more nurse-midwives.
    Fewer complications. Fewer re-admissions of mothers after birth. Fewer underweight (37 or 38 week) babies. Fewer babies in the NICU with respiratory problems.
    BARRY–
    You write: “Transparency tools that can help patients and referring doctors to learn about both prices . ..at different hospitals . ..before services are rendered and even before an appointment is made would be very helpful .. .”
    As I have explained in the past,a hospital usually cannot tell you what a service will cost ahead of time because they don’t know what they will find when you come in.
    They don’t know how hard it will be diagnose what ails you. They don’t know
    how difficult it will be to try to fix the problem. They don’t know what other diseases you may be suffering from that will complicate things.
    Even if you’ve just broken your arm and called a hospital to ask: “What wil it cost?” they would need to know– is it a hairline fracture or a mutliple fracture? Will it need to be “set”? (Often a layman can’t tell).
    Was there other damage– for instance to your shoulder–that you haven’t noticed becuase you’re focused on the pain caused by your broken arm?
    But, as a reader recently suggested, it would be possible for hospitals to provide information on what care cost a patient diagnosed with X, Y or Z who also suffered from B
    AFTER the treatment was delivered and billed. .
    It still would be difficult to make apples to apples comparisons– no two bodies are alike. And no one would be making “risk adjustments,” the way Dartmouth does when looking at data on hundreds of thousands of patients.
    Still one could get some idea as to whether one hospital was charging more than most by comparing prices for procedures that had already been done at different hospitals.
    As for competing for docs by paying them more, doctors at many of the best medical centers in he country make less, on salary, than they could in private practice–especially if they worked very hard in their private practice, bought diagnostic equipment for their offices and made money on testing, etc. etc.
    Why does Kaiser in places like California, Colorado, Hawaii and the Northwest have so little trouble atracting docs? They pay just slightly above the going market rate–and less than many of their docs could make elsewhere.
    As Pat indicated, doctors are making their decision based on the medical culture.

  36. Don, Diane
    Don:
    Thank you. I agree that the gap between median income and the cost of healthcare demonstrates the size of the problem we face.
    Diane:
    I, too, am concerned about how marijuana for medical care laws can be abused.
    On the other hand, I feel strongly that people experiencing severe pain or nausea should have access to anything that will help them.
    On the other hand, marijuana can have a truly debilitating effect on people who use it regularly for recreational reasons.
    So while I believe in medical marijuana, I do think we need tough laws for people who sell it to
    those who don’t need it for medical reasons–particarly people under the age fo 21. (I don’t favor prosecuting young users: the sellers are the problem.)
    I know many see pot as as a “harmless” drug; but I have known people who used it so often, over such a long period of time, that it really did change their lives …

  37. Maggie –
    I note that all of the Kaiser locations you cited are desirable places to work and raise a family. As for culture, I think a quite large percentage of doctors are very comfortable working in a collaborative, team oriented environment. When it comes to doctors, I suspect that there are three main types – team players, entrepreneurs, and dictators. The dictators don’t want people looking over their shoulder and the entrepreneurs are risk takers who want to make money as well as, hopefully, provide good care and satisfy patients.
    Regarding attracting doctors to work in underserved areas, you didn’t mention those who were born and educated in other countries. If they really want to come to America, they may be quite willing to work in Detroit or the Bronx. I agree about maximizing the use of NP’s, though, especially in rural areas where doctors may be few and far between.
    On price transparency, it lends itself well to surgical procedures, especially once we move to bundled pricing. Even when they don’t know what’s wrong with you ahead of time, it might be possible to price on a per diem basis. So, a day in our hospital in a regular room is $3,000 whether you just need observation or imaging or a battery of tests. In an ICI, CICU or NICU, it’s $10,000. Once they determine a diagnosis, case rate pricing could kick in. Obviously, price discovery is irrelevant for care delivered under emergency conditions but I don’t think that’s a large percentage of revenue for most hospitals, especially when you factor in outpatient services, which, by definition, are scheduled in advance and, by the way, lend themselves to price transparency quite well.

  38. Maggie et al,
    I was wondering, after reading Maggie’s ideas about professionalism, where the cut off is for a professional to sacrifice for the sake of others. I know we have those types of people in society, but usually they are religious people who do not expect any material gain. Their needs (food, water, and shelter) are taken care of by others. I just wondered what others thought about the limits of professional sacrfice.

  39. No, I was not talking about Mayo. I was talking about smaller towns and cities in Minnesota and the Dakotas, where the population contains large numbers of Native Americans and where over 50% of the payment is from government programs.
    Just a clarification. University of Minnesota Duluth is a two year program, covering basic science and early clinical, but the students then transfer to the main campus of the University of Minnesota Medical School in Minneapolis to finish med school. The combination of the selection process and the culture in the school is successful in getting signigicant numbers of its students to choose primary care in semi-rural settings as a career.
    The problem with many elite medical schools is not just their selection process, although people from upper class and highly educated backgrounds are less prone to go into primary care, but also the culture in the programs. In medical centers with high levels of research and with large numbers of nationally known specialists, the type of medicine that serves as a model is specialty oriented and centered in tertiary care institutions. This is pretty much independent of where they are located: Mayo has a medical school, and produces only small numbers of primary care people.
    I think the most important single factor in choosing medical students who are likely to work in areas of need is to choose people who grew up in areas of need. Kids raised in the Bronx, in Bemidji, MN, or in El Paso are much more likely to return to that setting for practice, and are much more likely to have primary care people as the role models who interested them in medicine. This does not work 100% of the time, by any means — the University of Minnesota at one time had more graduates practicing in California than in Minnesota, and the small town farm boy who I know best in medicine practices orthopedics in California — albeit for Kaiser. However a much larger portion of those students do choose to return to their roots to work.
    That would be my formula for increasing PCP’s in areas of need: recruit students from the background you want to serve, train them in settings that are located in the target areas and using teaching doctors who come from a PCP background, then send them to residency programs located in the areas of need. With luck, over half will choose PCP practices in the target areas.
    Of course, money, in the form of incomes for PCP’s closer to those of specialties or in the form of fellowships that pay for med school and supplement residency pay in exchange for committments to practice in the desired areas, would certainly help as well.

  40. Pat–
    First, I’m sorry I misunderstood when you were talking about difficulty attracting radiologists to Minnesota. When you said “we” I thought you were talking about Mayo. (Though I must admit it did strike me asnodd that it was hard to get radiologists to come to Mayo! Duh)
    Moving on to your most recent comment, you write:
    “I think the most important single factor in choosing medical students who are likely to work in areas of need is to choose people who grew up in areas of need. Kids raised in the Bronx, in Bemidji, MN, or in El Paso are much more likely to return to that setting for practice, and are much more likely to have primary care people as the role models who interested them in medicine. This does not work 100% of the time, by any means — the University of Minnesota at one time had more graduates practicing in California than in Minnesota , ,,
    “However a much larger portion of those students do choose to return to their roots to work.
    That would be my formula for increasing PCP’s in areas of need: recruit students from the background you want to serve, train them in settings that are located in the target areas and using teaching doctors who come from a PCP background, then send them to residency programs located in the areas of need. With luck, over half will choose PCP practices in the target areas.’”
    Pat–Yes, this is exactly what the medical research shows. It also reveals that older medical students are more likely to choose primary care and work in underserved areas. This may be because they have had more time to think about their decisions to go to med school and are more committed to the idea that it is a service profession. In other words, they are more mature. They also may have spent some years in a career that was fairly lucrative, but not personally fulfilling. Some lawyers go to med school. Has it ever struck you that many 21 year olds may be too young to begin training as physicians–too immature, too self-absorbed, too blinded by the “speck of self”? Would they be better off spending a few years in the world, finding out who they are, and what the world is about, before entering med school?
    I can’t help but remember what Harold Bloom (my mentor at the time) said when I, at age 21, decided to marry my 21-year-old first husband: “My dear, young men in their 20s are sleep-walking. They have absolutely no idea who they are.” I should add that I, too, was not old enough to understand who he was or who I was.
    Returning to the subject at hand: we’ve recognized the need to recruit low-income med students for a long time. In the 1970s, Washington created the National Health Service Corps (NHSC) to encourage these students to go to med school, providing scholarships and loan repayments/.to students who “chose to go where others choose not to go.”
    Typically, they make a two-to four year commitment to work in an underserved area, but the majority stay much longer. http://nhsc.hrsa.gov/about/NAC.pdf
    Finaly, Pat, your comment inspired me to do some research on the history of the NHSC from the 1970s to 2011. It turned into a post which I plan to publish Monday. Thank you!

  41. Barry–
    You write: “Regarding attracting doctors to work in underserved areas, you didn’t mention those who were born and educated in other countries. If they really want to come to America, they may be quite willing to work in Detroit or the Bronx.”
    A young doctor from India or Egypt also doesn’t want to work in Detroit or rural Mississippi.
    And he is even less likely to connect with patients there– psycholoigcally or culturally.
    The last thing that our low-income American paients need is more doctors who can’t
    understand them.
    Finally, most doctors from other countries who actually come here are not
    “sub-standard” doctors.
    When competing with U.S-trained docs for jobs in N.Y., Boston, etc. many do very well–and with good reason.
    Think of my Indian-trained eye-doctor. (See new post headlined: Guess Who Was Overtreated for More than 25 Years.)

  42. Maggie,
    I always hear you trump up nurse practitioners as the saviors of medicine, yet I never hear you speak of them personally. All of your posts are about how you saw the “optholmologist Dr X” or the “family physician Dr Y”
    Why arent you using a nurse practitioner for all of your healthcare needs?
    Secondly, you are making med school WAY more difficult to get into than it actually is. High standards left med school admissions about 10 years ago. At last count, there are 35 new MD/DO programs opened up or in planning over the next 5 years.
    Rocky Vista medical school in Colorado is a for-profit program that will accept any student with a pulse. Their average MCAT is a paltry 21. Other lower tier DO programs have MCAT scores as low as the 19-22 range, which is only the 20th percentile for ALL test takers.
    If you cant score better than the 21st percentile on the MCAT, you have no business being a doctor. So lets stop perpetuating the myth that you have to have amazing MCAT scores to get accepted to med school. That was true in 1980, but its not true now.
    Be wary of opening the flood doors to all URM/underserved kids to med school. NY Times did a series on Howard/Meharry and other traditonally black med schools and found that their alumni were a much higher risk for malpractice suits and sanctions by medical boards.
    The reason there arent many minorities in med school isnt because there is a discriminatory barrier at the med school admissions office; its because the pool of URMs that apply for med school is obscenely small.

  43. Susan–
    I live in New York City.
    I don’t know of any nurse practioners in the citiy practicing primary care medicine on their own. And I haven’t found (or heard of) a PCP who uses a nurse practioner to see his patients. We also don’t have Kaiser or any similar integrated health care systems here.
    But my daughter is having a baby, and I urged her to pick a hospital that does use a large number of nurse- practioners to deliver babies. (Many hospitals in NYC don’t even let nurse midwives deliver.)
    When she met with her OB/Gyn from this hosptial, he gave her a choice between having him as her primary care giver, or choosing a nurse mid-wife as her primary.
    She liked the Ob-gyn very much, but chose the nurse midwife, knowing that she would have more time to talk to her, supervise her delivery, etc. (At her hospital she can also have a doula–in addition to the nurse practitioner.)
    I am more than willing to put my grandchild where my laptop is. And I didn’t persuade my daughter to make this choice. She is extraordinarily independent– thought about it, read about it, and decided on the nurse midwife.
    Many of these for-profit med schools are … “substandard” is a polite way to put it.
    In the years ahead, many will be closed.
    As for the pool of minority students: there are a great many very intelligent minority students (and low-income white students) in this country who could do well in med school, and become great
    clinicians, if they could
    afford and get into med school.

  44. I think some alternative approaches may be required when it comes to providing medical care to patients who live in rural areas.
    Many parts of rural America have been losing population for years. Part of this is due to ongoing consolidation of agriculture and, to some extent, ranching. This consolidation translates to fewer economic opportunities for young people coming out of school which leads many to move away, often reluctantly. Many of our more rural states tend to rank high on the median age of the population and the percentage that is 65 and older. Even if people who grew up in a rural area wanted to come back there to practice medicine, it may not be practical if the local school either closed or is simply too small to provide a well rounded education including extra curricular activities. A full scholarship to medical school in exchange for a lengthy commitment to practice in such an environment won’t change that.
    Some of the healthcare coverage gap could be filled by doctors who rotate in and out, perhaps a week at a time, from larger towns and cities to serve this population. Electronic records could facilitate handoffs and make it easier to consult with doctors from outside the area. People needing more sophisticated care could be transported by helicopter to a regional medical center when necessary. For more routine care, Skype and similar technologies could allow patients and doctors to interact via a computer.
    While the approach described above may not be ideal, it’s a lot better than nothing and everything in life is a tradeoff. There are some advantages to living in rural areas including much cheaper housing costs and wide open spaces, The downside is that services of all types are scarcer than in more populated areas and it is often necessary to travel considerable distances to reach them.

  45. Barry–
    I’m now writing a post about the National Health Services Corps which quotes reserach showing that most doctors who choose to work in underservevd areas don’t do if for the money. I other words, you are right, scholarships and loan repayment programs alone will not do the trick.
    The majority work in these areas out of a sense of “mission”–and usually they are going back to a place very much like the place where they grew up. They understand the neeeds of their communities, and want to help.
    This is why the best way to serve the needs of underserved areas is to recruit more kids from these areas to go to med school. Recruitment often begins as early as high school. Mentors help the teen-ager apply to college. They take an interest in his progess, and help him apply to med school.
    But Med schools need to lower teh bar on MCAT scores and GPAS.
    We know that MCATs discriminate against kids from low-income households (as do most standardized tests). But we also know that while their grades and sccores are not as good when they enter med school, their clinical skills are just as good.
    In the end this is what is important.
    These kids also, of course, need scholarhips and loan repayment programs to go to med school, but this is not what persuades them to locate in under-served areas.
    Once again, people are not always as motivated by money as we often assume.

  46. In addition to the questionable training received at for profit med schools, both in the US and abroad, they are very, very expensive — tuition and fees is often in the $75,000 a year to $100,000 a year range. This is well outside the range that people from middle class and working class backgrounds can afford, and will saddle anyone who tries to pay with loans with a debt load, part of which continues to compound while they are in training, that is in the $500,000 or more range. Doctors who owe $500,000 almost never choose to practice primary care in underserved areas.
    I know about the NHSC in the abstract, but for some reason, despite living and working in what would be NHSC target areas for most of my career I have never run into them. Public Health Service enrollees who had their med school financed in exchange for a PHS committment working at Indian Health Service clinics and hospitals, yes, but not NHSC people.
    The biggest program bringing doctors to areas of need in the Northland is the J-1 and H1-B visa program. Unfortunately, many doctors on those visa programs depart for warmer climates and bigger cities when they have served out their initial obligations. A few stay on, though. Since these doctors almost always have US residencies or residency training in very high quality European or Canadian systems they are usually fine doctors, and I have had good experiences working with them. The big downside there is that the US is taking people trained in other countries, often at considerable government expense, and removing them from countries that need their services as well.

  47. Pat S.–
    Yes, I agree that many doctors coming from other countries are excllent. Abd that, when they come here, they are leaving a system that has trained them– at government (taxpayer expense)
    This doesn’t seem fair.
    Meanwhile these docs are not well suited to practicing in our underserved areas. For them, rural Mississippi is a culture than is even more foreign than it is for U.S. docs coming from relatively affluent famlies in urban areas.
    They may go there for a very few years, but they will leave for U.S. cities whre they feel more comfortable and want to raise their families. . .
    Patients in underserved areas (like all paitents) need doctors who understand their culture, concerns,fear and hopes and can communicate with them easily.

  48. “However, as has been shown in numerous studies, the total charges for each patient at Mayo statistically are much lower for managing the same disease — again comparing with Mass General, about 30% lower.”
    Pat, could you give me a good reference for that?
    I have no argument with the quality of care at Mayo, but my (anecdotal) experience is that non-Medicare patients receive very high priced care (shot-gun approach, duplication of testing, etc.).
    Thanks.

  49. PCP –
    The data from the Dartmouth studies is the most reliable, although it is mainly Medicare data from the Medicare data bases. It shows Mayo to be both more effective and less expensive than most places, and certainly than systems in the Sun Belt and the East and West Coasts. The data has been replicated year after year, and is always the same.
    It is Medicare data. However, I think it is not correct to suggest that Medicare and private insurance patients are treated differently at Mayo any place except the billing office. Doctors at Mayo — and I know many of them and worked there myself for a while — have no idea about what insurance patients have. The style of practice is uniform. Consequently, I am certain that Mayo’s performance on non-Medicare patients is equal to their perfomance on Medicare.
    I would argue that the same is true elsewhere: the performance of health care systems on Medicare patients is a valid surrogate for their performance on all patients, possibly accepting extremely poor patients who get care only through ER’s.
    As to your own anecdotal experience, I don’t doubt that there are people who have had negative experiences at Mayo. There were some when I was there. No system is infallible, and some patients have problems that remain puzzling.
    However, it is important to note that anecdotal experience is not a substitute for data, and that anecdotal experience is often colored by extremes of experience. Someone is much more likely to tell you about a bad experience than a good one, and memories about bad experiences tend to crowd out more routine positive memories.
    In addition to practicing at Mayo I also practiced in both private practice and other group practices in Mayo’s service area. We had a lot of patients over the years who were referred to Mayo or sought second opinions there. In the end, the experience of most patients with Mayo was positive, sometimes spectacularly.
    However, I can also attest to the notion that many doctors I worked with, including some who had trained there, had a grudging and grumpy attitude toward Mayo, at least partly because they were tired of the attitude of many patients that Mayo represented something miraculous (the “Lourdes of the Midwest” was the running joke.) Mayo’s model for physician employent, pay, and supervision was also widely resented by many doctors (the “Mao Clinic” was the joke there) who resented the implications for their own work and incomes.
    It may be that the Mayo culture cannot be exported to places where opposing models are part of the health care ethos, but I do believe that it is extremely successful in situ, and has had an influence in the Upper Midwest that has a lot to do with the generally superior performance of health care in that region compared with the rest of the US.

  50. Pat:
    Thanks for your thoughtful reply.
    My point is that, until we can compare what providers are paid by private insurers for treating condition X, it’s hard to hold anyone up as model for the health care of the future.
    The enormous variation in negociated fees are just starting to get some publicity (in large part, thanks to the work of the AG in Massachusetts) and it’s pretty shocking. I like to get my patients to bring in their EOBs, and I’ve seen as much as 500% variability in payments by the same insurer for something as simple as a urine dipstick. That has no relation to quality of care: it’s purely a function of negociating power.
    Again, let me say that I’ve never had a patient report a negative experience at Mayo, but it can be quite expensive! I’m not criticizing them for charging what they can, but I’m a little tired of them being presented as a model for the rest of us to emulate.

  51. pcp–
    May’s fee for a particular service (for instance, one night in a hospital room) may appear high when compared to another medical center.
    But the Medicare data shows very clearly that the total cost of care (your final bill) is lower because the patient undergoes fewer tests and treatments, sees fewer specialists, and spends fewer days in the hospital when compared to a patient at another hospital–after
    adjusting for risks (co-morbitties, income, race, sex, etc. etc.)
    Mayo is just much more efficient. I once wrote a post that was an interview with a doc who left Mayo after a number of years because he wanted to be in NYC. He worked at Columbia-Presbyeterian– basically a good hospital. He liked his colleages, liked his patients, loved being in N.Y.– but couldn’t stand the waste and inefficiency. It took forever to get anything done. Very poor co-ordination. Docs not all listening to the same drummer. AFter a few years, he went back to Mayo.
    And Pat is right– other docs from Mayo have told me that they had no idea what insurance a patient had–if any. They had no idea what Mayo is being paid for their service.
    They simply get a salary, and after a few years at Mayo all docs in a given specialty receive the same salary. It doesn’t matter if you’re a big name, internatonally known for your reserach etc, same salary, same size office.
    Docs aren’t competing with each other. They’re collaborating. Not all docs like the culture, but for patients, it’s great.

  52. PCP –
    There are really two issues here: first, how efficiently and effectively that a health care system can and does deliver care, and second, how much the system charges for that care based on the unit cost for any individual service.
    As Maggie says, the first issue is really the more important for the US health care system in the long run. US health care is much more expensive and somewhat less effective than anywhere else in the developed world because of overutilization of care, especially high tech tests and procedures in settings that are either not useful or actually harmful. This ends up costing Americans between $500 billion and $1 trillion dollars a year in unnecessary health care costs and puts us on a direct pathway to making health care so expensive as to be unaffordable in the US to anyone who is not very wealthy or employed by a company that has money to burn, and to destroying the integrity of the economy and the government in the process. Mayo and other large group systems and high quality HMO’s like Kaiser and Group Health Cooperative offer a bright light in this area since their ability to provide services more efficiently and effectively prove that there is hope if other systems can be induced to follow their models.
    The second issue, which you allude to, is the charges for individual services being too high. This occurs in a very complex welter of dysfunctional billing behavior that is characteristic of American health care.
    First, almost every health care system and provider creates a charge for every service which is much higher than they expect to be paid. Individuals who have no insurance sometimes are presented with bills for this level of payment, and should in fact immediately contact the provider’s billing department and initiate a request for discounts. Otherwise, this is just the first step in a complex negotiation between health care providers and hospitals on one side and insurance companies on the other. The insurance companies simply impose large discounts on providers and hospitals with little market power, but are forced to enter into negotiation with systems that have market power based on market control or on being a prestige provider, and arrive at a price the insurers will pay and the providers accept.
    This second issue is not good for US health care either. Medicare and other government programs sidestep this whole question by simply imposing payments on any system or provider who wants to deal with their patients. Insurers sidestep this with small organizations but have to deal with it with larger ones. Insurance companies have engaged in more aggressive efforts to impose some sense on this process in the past, but found that it was easier — and better for their public image — to simply accept the situation we have now. People who pay their own bills are caught in the riptide on all this.
    These problems have been solved in every other developed country by having the governments intervene, either as the payer or provider itself or as a regulator imposing price control on private markets. All of those solutions work very well elsewhere, but so far are unacceptable in the US politically. The ACA is a first step in sneaking up on a solution to this, if it is allowed to function without being destroyed either by politicians or by politicized courts. The ACA is by no means an acceptable end point to health care, and its advocates fully expected future modifications to improve it. The ACA as it now exists does begin to deal with both of these problems, the first through regulation of practice patterns through Medicare and the second through the insurance exchanges and insurance regulation, but since that has not started yet we have not seen whether it will work or not.
    Meanwhile, if you get a very high initial bill from Mayo or from Mass General or from anywhere, you can fully expect your insurer to have negotiated much lower end charges, even for these high power providers. If you have to pay the bill yourself, you need to begin negotiations (but not just refuse to pay.) I have successfully negotiated discounts up to 40% with providers when I had to cover medical bills out of pocket. Doing so just seems strange, since most Americans think of health care bills as being more like the prices at Target and less like a price in a flea market, but in reality they are closer to the latter.

  53. Pat S.
    Perhaps you could help to clear up some confusion. If a Medicare patient goes to Mayo and knows that what he needs is a CABG or a hip replacement, it seems that lots of medical centers can do those operations as quickly and as well as Mayo yet you suggest that Mayo charges a lot more for them, at least to commercial payers, than even Massachusetts General. If the patient needs to undergo testing to determine a diagnosis, I can see where better coordination and faster testing turnaround times might enable Mayo to do this part of the job in less time and present the payer with a lower total bill than a less efficient hospital. However, once the diagnosis is determined, isn’t it paid on a DRG or case rate basis so the hospital would get the same reimbursement no matter how much additional or unnecessary testing it does? What is the likely patient mix between those who come to Mayo knowing ahead of time what needs to be done vs. those who need testing to first determine a diagnosis? If a significant portion of patients are in the first category, I don’t understand how Mayo can be cheaper overall if its charges to commercial payers per procedure are much higher than its competitors’. For Medicare patients, by contrast, Mayo is, presumably, accepting Medicare’s dictated prices like every other provider that accepts Medicare patients. What am I missing here? Certainly, it seems that the difference between Medicare’s dictated prices and commercial payers’ negotiated prices are a significant issue which Dartmouth’s focus primarily on Medicare patients doesn’t fully reflect.

  54. Barry, I think, is asking the same question as I am:
    Is there any data showing that Mayo and other large group systems deliver care at a lower cost to non-Medicare patients than the national average?
    If we don’t have that data, it’s too early to trumpet this model as one to be widely emulated.
    Barry also correctly points out that a large portion of a Medicare patient’s bill is covered by a set DRG fee. If Super Medical Center A is getting paid by commercial insurers 300% of what Podunk General is, Super certainly has the funds to invest in more staff and such that will allow them to treat Medicare patients more efficiently, that is, get them in and out quicker (after the marble fountains in the lobby have been paid for, of course!).
    And another question that comes up is whether quality measures are valid when one hospital is getting paid twice as much as another for the same procedures.
    Great discussion.

  55. Barry- & pc;
    Barry–The cost of a hip replacement is not as simple as it might seem.
    Much turns on the cost of the device (the artifical hip). Some are more than twice as expensive as others.
    And the hip can represent a very, very large part of the expense. (At this point in time, device manufacturers make much more money on hip and knee replacments than orthopedic surgeons and most hospitals do.)
    At most hospitals, the surgeon (who usually doesn’t work for the hospita) picks the hip he uses. If the hospital won’t use that hip, he takes his patients elsewhere.
    Unfortunately, we have much evidence that device
    manufacturers pay surgeons enormous sums (houndrdds of thousands a year to inddividual physicans ) to “consult” and educate other doctors on using their hips: going to conferences, talking about the virtues of the hip, teaching residents to use the hip, consulting on manking very major changes in the hip.
    (Device manfactuers have paid hundreds in millions in fines implictly admitting to these allegations. Whislte-blowers have provided documented details.
    Understandably, hip manufacturers promote their newest, most expensive hips, and these are the ones that many surgeons use.
    The New York Times has written about how device manufacturers who are wooing surgeons take them to strip clubs, on expensive vacations, etc.
    Docs at Mayo don’t do this. (Few strip clubs in Rochester, Minnesota– perhaps because it’s too cold.)
    Seriously, any doc at Mayo would be mortified to be caught taking what are essentially bribes. And at places like Mayo the medical center itself decides which devices docs use–based on medical evidnece.
    The surgeons work for Mayo; they are not indepedent agents who make these decisons on their own.
    Secondly, the cost of a hip replacement is tied up with how long you are in the hospital.
    Were there complications following surgery? Did you pick up an infection while in the hospital? Did you have to be readmitted because you ran into problems after you went home.?
    The cost of a hip replacement varies hugely, from one hospital to another.
    As for Medicare vs. private insurers:
    Medicare DOES NOT PAY A FIXED PRICE FOR A HIP REPLACEMENT. There is a fixed price related to the initial diagnosisi (“needs hip replacement”) but then that price will be upped to a new DRG (diagnostic reated code) based on what comes up after the patient enters the hospital: ocmplications, infections, etc. etc.etc. If the patient turns out to be an “outlier” (needs many more day hospital) Medicare pays much more.
    This is why the Dartmouth data shows that what Medicare pay for a patient suffering from hip fracture varies hugely, depending on the region and the hopsital.
    One would think that caring for one patient suffering from a hip fracture would be very much like caring for a very simliar patient (after adjusting for age, income, comorbities, sex, race etc. ) suffering from a hip fracture.
    One would be wrong.
    If the patient develps bed sores, a new DRG kicks in.
    (Bed sores are the most expensive and most common complication accompanying care in U.S. hospitals.
    Pretty easy to avoid (if somone “turns” the patient every few hours.) But very, very hard to treat once they develp.
    And the hospital has to hire anough staff to have people available to “turn”hip fracture patients (who typically cannot turn themslves.) Two people needed to turn a heavy man. And “turning” ocrrectly requires training; we are not talking about minimum-wage health care workers.)
    Then there are the hospital acquired infections.
    And medication mix-ups. (The patient who broke her hip is given a medication intended for someone else– or a medication that she is allergic to.
    I could go on.
    Barry, what you really need to do is go to http://www.dartmouthatlas.org,
    search “hip” or “hip fractures” and you will find the study that looked at Medicare patients suffering hip fractures which reveals the range of costs . . .
    If you really want to understand the costs of medical care (and I think you do) then you really should read the Dartmouth
    reserach. You would probably find it fascinating.
    PCP–
    The Dartmouth research provides all of the data that one might want showing exactly how and why Mayo etc. offer more efficent care.
    For details: Go to http://www.dartmouthatlas.com and search “Mayo.”
    Or Google my name, and “Dartmouth research” and “Mayo Clinic” and you’ll find posts and articles that I have written about this.
    I’m glad you enjoyed the thread: I agree. It’s a rich thread..

  56. Thanks for the references: fascinating stuff.
    But again, I have to ask, do we have any data on the costs of treating non-Medicare patients at particular hospitals?
    If not, we’re just getting a partial picture, and really still have no idea who is practicing cost-efficient medicine.

  57. Susan: Your post regarding the MCAT scores of students matriculating to Rocky Vista University College of Osteopathic Medicine is erroneous. The fact is that the mean MCAT score is over 27, which is above the mean for all DO school matriculants. This is quite an achievement given the youth of the school. The Office of Admissions would be happy to provide you with accurate statistics should you wish to post anything else regarding the school in the future.

  58. Barry –
    It is unusual for a patient to come to Mayo fully worked up elsewhere for a procedure essentially ordered elsewhere. Most people come to Mayo — and almost any center — at best partly worked up aor for a second opinion. If they are completely worked up and satisfied that they need a procedure, they are likely treated elsewhere as well.
    The difference in Mayo — and Cleveland Clinic, InterMountain Clinic, Geisinger Clinic, and any number of smaller Midwestern clinics — compared with other centers is that they arrive at the definitive diagnosis and treatment by a more direct route. It is also true that several of the centers have superior outcomes in terms of fewer complications and less need for post-op care.
    So you are right in the sense that if you are essentially ordering a procedure like ordering a book from Amazon the cost of the procedure for a Medicare patient would be similar at Mayo or at any other center in the Medicare reimbursement area that Mayo is in — Medicare payments do vary from region to region. You might save money by having better outcome results. However, few people are in that position, since most — following your example of CABG — would more likely arrive with a diagnosis of chest pain and an abnormal stress ECG — and require some additional work up, which is generally cheaper at Mayo due to a more direct route to the outcome.
    In addition, it may be possible that Mayo would disagree with the prescription from elsewhere, and, being more likely to be in compliance with standards suggested by studies showing that many CABG and coronary angioplasty and stenting procedures are not actually indicated based on best research, might well suggest that you be treated with medical therapy.
    Therefore, Mayo ends up — as is well documented in the Dartmouth data — to cost less and to have more effective results than many other centers, even though their actual Medicare charge for a CABG would be very similar or identical. The comparison is for DRG categories — heart attack, angina, etc. — not for the procedures themselves.

  59. PCP –
    Again, you are being distracted by two seperate issues.
    There are two sets of facts here, both of which suggest ways of making US health care better and less expensive. One of them accesses a much bigger pot of gold, and Maggie keeps talking about that. The other is also worthwhile as a way to attain savings, and you keep talking about that. They are certainly not in competition with each other, despite the fact that you seem to think they are.
    First, Mayo, Geisinger, InterMountain, Cleveland Clinic, and a handful of large clinics in the Midwest can deliver care for less money and with better outcomes than most other centers. We know that is true because in fact they do that in Medicare patient data, documented year after year for 30 years, so there is not a question about this. In what little private insurance data exists (private insurers tend to be very guarded about their data, both for reasons of privacy and for protecting what amounts to proprietary commercial information in a competitive setting) these centers do achieve more efficient results, as Maggie notes below.
    Second, these centers, others like them, and all the other providers who use strong market power to extract higher fees from private insurers need to be motivated to provide that care for less money as well. We know that at the premier centers that even for private patients the same practice patterns can save money by reaching desired outcomes and having fewer untoward results that add to cost, but we also know they are charging more for the procedures and individual interactions than some smaller private practice centers.
    We actually know how to fix that too, since we can see it happening at places like Kaiser that are on prospective payment models and are motivated to be as low overhead as possible, and in centers in Europe and in some Asian countries. Fewer dollars spent on marble lobbies, on expensive institutional advertising, on expensive duplications of equipment mainly designed to promote the center and placate “rainmaker” doctors, less money directed toward medical “arms races” and wasteful competition with other nearby centers, and so on would alow medical systems including places like Mayo to reduce individual charges by practicing in a more cost conscious way.
    So we need to do two things.
    First, get medical systems to practice the most effective and efficient medical care as illustrated by the places like Mayo. That is where the biggest pile of cash and the real low hanging fruit is — patterns of care for coronary artery disease, joint disease, back pain, for management of hypertension, proven inexpensive techniques for preventing expensive complications that lead to extended stays and re-admission, and so on could save up to $1 trillion a year and could arrest and reverse health care inflation, all well documented in medical research that is poorly followed in many places.
    Second, we need to create some way to have payers have the power to have an impact on high prices and motivate all centers to operate in ways that reduce overhead and the need to extort high fees.
    The two are not competitive, but complimentary, and both should be implemented. The ACA is designed to try for both, and we need to strengthen, not weaken, the parts of the ACA that do that.
    However, it is not sensible to argue that we should not start working on one or the other until the other one is addressed. We need to do both, and thereby start the struggle to bring the US into the ranges of health care cost per person, cost as a fraction of GDP, and cost for treatment of various categories of disease that are typical of the rest of the developed world. The added bonus here is that data also shows that results in terms of outcomes, longevity, and quality of life would improve as well.
    The question is not either/or — it is why we aren’t moving forward in this win/win/win scenario.

  60. Pat and Maggie –
    Thanks to you both for the helpful and informative responses.
    So, if I understand you correctly, Mayo and the other centers you mentioned have competitive advantages that can be summarized as follows:
    1. They can reach a definitive diagnosis in less time with less testing and lower overall cost even if their payment per test that they actually do is higher than other hospitals are paid.
    2. In the case of surgical procedures especially, they are more likely to do the job right the first time with less chance of infections, complications and readmissions.
    3. Unnecessary services, tests and procedures are kept to a minimum. No matter how much they charge per procedure, they don’t get paid anything for work they don’t do because it’s not necessary.
    I think bundled payments, at least for surgical procedures, would go a long way toward creating financial incentives to minimize infections, complications and readmissions. To not get paid for mistakes and poor quality should foster a sense of urgency to reduce mistakes and improve quality. Global payments instead of fee for service could address the other two issues, but providers who are structured around the fee for service payment model may feel that they cannot project their costs with sufficient accuracy to accept the financial risk inherent in global payments. Something like BCBS of MA’s Alternative Quality Contract with shared savings and shared risk may be a viable middle ground at least for the short to intermediate term.
    At the margin, I also think tort reform would be helpful as would tiered networks that require higher patient co-pays if they want to go to more expensive, less cost-effective providers. Referring doctors would also need user friendly tools to help them easily identify which specialists and hospitals are the most cost-effective, high quality providers in their region.

  61. Pat:
    I think I agree with just about everything you said.
    We’re all aware that some institutions spend too many Medicare dollars for no improvement in outcomes; I just wish more attention would be paid to the outrageous fees that some institutions can negociate with private insurers. As you’ve said, this data is hard to access, and we really have no idea how large the amounts involved are.
    My experience is just anecdotal, but my patients show me LOTS of EOBs from the ivory tower down the road where immunizations are marked up 500% and a two-view chest radiograph is $400 (that’s what is PAID by our largest “non-profit” insurer). This is nothing but extortion, and I think we are at the point where it is morally unacceptable for the physicians in these institutions to pretend they don’t know what is being done with their tax ID numbers.
    To put it succinctly: it’s great that Dr. Gawande alerted us to what is going on in McAllen, Texas, but now he needs to turn his attention to the mess in his backyard (and that he contracts with) that is Partners Health!

  62. PCP and Barry –
    I think I agree pretty much with everything you say in your last posts, except for:
    – Barry, I do not think that tort reform as it is usually conceived would have much impact on medical costs. Texas is a state with such aggressive tort reform that they are demanding to be excluded from the tort reform plan that the House Republicans have proposed since it is less strict, yet McAllen and other sites in Texas are poster children for overutilization and exceptionally high costs. Experience with tort reform in states like Texas, California, and elsewhere has shown that it does not affect practice patterns and costs. Tort reform of the type proposed by Ezekial Emanuel might be another issue, but I suspect many doctors would be no more comfortable with that — and perhaps less so — than with the current system.
    – PCP: “I think we are at the point where it is morally unacceptable for the physicians in these institutions to pretend they don’t know what is being done with their tax ID numbers.” Perhaps, but I think it is hard to realize how little many doctors, certainly in large institutions but even members of smaller private groups not involved directly in management, actually know about the financial features of their practices except for what their own paychecks look like. I have often pointed out cost issues for procedures, tests, and drugs to doctors I work with and been amazed at the level of ignorance. Maybe all doctors should be required to attend a half day inservice once a year in which the charge arrangements and costs involved in what they do are explained to them. The only thing is that in a lot of places that information is a “trade secret” shared only with payers, again for competitive reasons. I suspect that most people at the Harvard affiliated programs have no idea of what the arrangement with major private payers is, except for what they may have read in the Globe, which they may well have proceded to ignore. I am sure that Gawande and Berwick are and were aware of the system’s performance in the Dartmouth data set, but may well have believed that there was some special explanation for why the data seemed to be that way. The NY Times, which should be smart enough to figure out what is going on, ran an article a few months ago in which they unquestioningly swallowed explainations from several systems in NY City as to why they perform so poorly in the Dartmouth data without bothering to research why those explanations were false.
    In the end, people have a hard time accepting that exalted and beloved institutions they work at or they depend on for care are engaging in inappropriate practice patterns and extortionate price negotiations, since they want to believe that the systems are all good guys with white hats as well as white coats. It is especially hard for people on the East and West Coasts to accept the fact that medical systems in flyover country are doing better in terms of both effectiveness of results and costs than the providers in their own much more “prestigious” systems, while Sunbelt residents are quick to believe that the data is just another left wing conspiracy designed to steal their freedom.

  63. Maggie –
    When it comes to tort reform, I’ve always said that damage caps are not the answer. Limits on non-economic damages may reduce the number of potential malpractice cases that will pencil out economically for plaintiffs’ lawyers, but they do absolutely nothing to make medical dispute resolution more predictable or objective for doctors. True malpractice reform means getting dispute resolution out of the hands of juries in favor of health courts or some other appropriate panel of experts. It also means robust safe harbor protection from lawsuits for doctors who follow evidence based standards where they exist. If such reforms were put in place, it would probably still take 3-5 years at least before they started to gain credibility with doctors. They would want to see if the process works as intended, especially in historically plaintiff friendly jurisdictions before they start to develop enough confidence to move toward more conservative (less defensive medicine) practice patterns.
    As for the doctors in McAllen, TX, yes, they’re money driven. The way to deal with that is publicity at the individual physician level. For example, suppose a heart surgeon in McAllen has 100 of his cases from the last year or two audited by a group of medical experts and it turns out that 65 of the surgeries were medically unnecessary vs. a presumably much lower number by similar doctors who rate well for cost-effective and evidence based practice patterns. If you knew that, would you want him as your surgeon? I wouldn’t.
    Back to malpractice, don’t take my word for it. Ask the doctors what sort of dispute resolution system would give them enough confidence to reduce their own practice of defensive medicine.

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