Cycles Not Circles

Posted on January 7, 2013 by John G. Self

“I feel like I am running in circles,” a successful Hospital CEO recently joked. “As we develop strategies to reshape our organization for the Affordable Care Act, I feel like I am revisiting some places I have been before.”

Actually, if he had substituted the word “cycles” for “circles” he would have been more accurate.

Those working in healthcare services, as I was, in the early 1980s will remember the shift from their addiction to cost-based reimbursement—with its cash flow enhancing PIP (permanent interim payments) and depth of knowledge on how to maximize payments under it—to a prospective payment plan based on Diagnostic Related Groupings (DRGs) that essentially capped payments to hospitals. It is important to remember that physicians got a pass from the program. This created new conflicts between hospital executives and doctors.

This change in reimbursement fueled an expansion in outpatient services and an era where virtually anything that included the term “outpatient” was in vogue. Hospitals which were looking for ways to shift costs, created their own home care agencies, among other things. Capital allocation frequently focused on outpatient services.

In the 1980s, hospitals also began to acquire or manage smaller regional hospitals in hopes of controlling the flow of patient referrals until malpractice cases originating in those smaller hospitals, and the realization that the cost of maintaining those hospital networks often exceeded any benefit.

The investor-owned hospital management industry exploded, acquiring, for the most part, smaller community hospitals whose boards saw an opportunity to improve their facilities through access to lower-cost capital and to guarantee the long-term viability of their hospital.

Then, we began to move in a different direction, and a new cycle began. As commercial reimbursement began to change, and managed care became a part of our reimbursement lexicon, hospital executives started to think in terms of vertical integration—owning or controlling medical practices, delivery of care, and payment systems.

The number of hospitals that lost money in acquiring physician practices and in trying to master the complexities of being a payer were numerous. Some lost so much they were forced to merge to survive their disastrous strategies.

In the late 1980s and early 1990s, the industry recycled yet again. To reduce expenses and erase losses from a decade of diversification, hospital CEOs began shedding assets to focus on core business lines—inpatient and outpatient care.

Investor-owned hospital systems which, for the most part, avoided some of these mistakes, consolidated and acquired even more hospitals.

The 1990s also saw a return to focusing on traditional care settings. Some hospitals, facing demand for inpatient beds to care for sicker patients, began to shift capital into new or renovated critical care beds, state-of-the art inpatient rooms and support facilities. But when an effort to reform healthcare failed, managed care—a market-driven solution to reduce escalating costs—emerged, creating no end of frustrations for hospitals, physicians and other providers. Over time, consumers joined the outcry and this, too, receded.

Now, in 2013, we are beginning a new cycle.

For the older leaders who took their licks in earlier decades, there is a sense that we are repeating history. Hospitals are again acquiring physicians. Clinicians are trying to improve quality of care and patient safety while facing pressures to reduce inpatient stays or shift care to new less costly venues.

Meanwhile, insurance companies are looking at the strategic advantages and feasibility of acquiring hospitals. Hospitals are shedding costs as reimbursement shrinks as well as to create or affiliate with accountable care organizations, the modern-day “at risk” payment structure, build medical home networks through which primary care providers will, theoretically, be able to improve access and control costs, making it today’s version of the managed care “gatekeepers” in the 1990s.

EMS and home care agencies are emerging as important players to eliminate or reduce costly readmissions, unnecessary hospitalizations and care of chronically ill patients.

As this cycle evolves, there will be other changes and evolutions, some familiar, some revolutionary, but whether it’s a circle or a cycle, it still manages to come around.

Battle for Physician Loyalty, Admissions Drive Doctor Employment

Posted on November 2, 2012 by John G. Self

In markets where physicians hold ownership stakes or financial interests in one hospital, and where there is evidence that those same physicians are discharging patients from a competing hospital’s emergency department over to their own outpatient facility to be possibly treated in their own hospital, look for new battle lines to be drawn.

For hundreds of community not-for-profit hospitals throughout the nation, physicians are still seen as the customer since they are the only ones who can admit a patient to a hospital. However, today, it is not uncommon for those physicians to be a customer at 9 AM and by 2 PM to be a competitor, working in facilities in which they have an ownership interest or where they are rewarded for their contributions. This anomaly too, is one of the many things that is changing in healthcare.

There are few remaining days left where there will be friendly competition between hospitals for the loyalties of independent physicians. Many not-for-profits, which for years have allowed entrepreneurial doctors to cherry-pick patients for admission—allowing those physicians to have their cake and eat it too—are taking a much tougher stand. They will have no other choice if they hope to survive.

This shift to a more no-nonsense market strategy is what happens in medicine when it becomes all about the money. Doctors are being forced to choose sides. In defense of doctors, the drive to owning, or having an equity interest in a hospital or some outpatient service, is an attempt to protect real and perceived threats to their incomes.

Community not-for-profit hospitals are employing physicians at an increasing pace. Eventually, to make these employed physician practice investments work monetarily, they will have to move to the integrated health system/closed medical staff model as a means of survival.

With a strategy that has its fair share of risks and requires skillful implementation, there is a cautionary note:

You cannot acquire physician practices and maintain a business-as-usual management model. A collaborative, shared governance structure is essential. This means recruiting or developing physician executives to share in the leadership responsibilities. Having a Chief Medical Officer is not the end game but just the first step.

This transformation will keep the recruiters and organizational development consultants very busy and dramatically change medical development and physician recruiting.

For Some Physicians It’s Not Just About the Money

Posted on May 29, 2012 by John G. Self

I know this sounds painfully naïve, but in the world of healthcare, when did it become so cynically about the money?

In virtually every analysis concerning the pros and cons of America’s so-called healthcare ‘system,’ money is front and center on almost every list assigning blame for our less than stellar performance. In tough economic times, when millions of Americans do not have insurance or access to care, profits reported by hospitals, pharmaceutical companies, and insurance providers, to name a few, and invariably, compensation for the executives and physicians who runs these businesses and care for the patients, are lightning rods for the chattering pundits, lawmakers and state and federal regulators. New York, for example, recently proposed that not-for-profits that receive public money must limit the base salaries of its chief executives to less than $200,000.

The debate becomes inflammatory when it turns to compensation of physicians in clinical practice. There are anecdotal stories aplenty of how physicians perform unnecessary tests and interventional diagnostic procedures. Cardiologists in some markets are singled out for the numbers of stents they implant. Oncologists get their share of criticism for, some argue, unnecessary administration of chemotherapy – and their failure to refer to hospice – even when the case is clearly hopeless. Critics are quick to bundle these physicians in with the greedy Wall Street bankers and unscrupulous mortgage loan originators who were in it for the money, damn the ethics or the consequences.

Are their widespread abuses? Yes. And it includes all specialties. A senior partner in a highly respected radiology group recently decried the attitudes of far too many young physicians who are more concerned with the compensation and time off than the patients or the quality of the practice. There is little or no attempt to mask their real priority, and it is not the patient, he sadly complained.

But there is another side to this story, and it deserves thoughtful consideration.

Leeat Granek, a healthcare psychologist and post-doctoral fellow at Toronto’s Hospital for Sick Children, revealed in a Sunday New York Times Op-Ed piece that in the case of some physicians, what appears to be wasteful or inappropriate intervention, may be driven by a doctor’s grief in treating a terminally ill patient.

In a study on the issue of physician grief, Granek and her colleagues found that half of the doctors who participated in the study admitted that “their discomfort with their grief over patient loss could affect their treatment decisions with subsequent patients, leading them, for instance, to provide more aggressive chemotherapy, to place a patient in a clinical trial, or to recommend further surgery when palliative care might be a better option.”

“One oncologist in our study remarked: “I see an inability sometimes to stop treatment when treatment should be stopped. When treatment is futile, when it is clearly futile.”

The study indicated that physician grief in the medical context is considered shameful and unprofessional. “More than half of our participants,” Mr. Granek writes, “reported feelings of failure, self-doubt, sadness, and powerlessness as part of their grief experience, and a third of the physicians talked about their feelings of guilt, loss of sleep and crying.

“Unease with losing patients also affected the doctors’ inability to communicate about end of life issues with patients and their families. Half of our participants said they distanced themselves and withdrew from patients as the patients got closer to dying…”

The study concludes that virtually all physicians want what is best for their patients, but in the case of death and dying, most physicians are ill-equipped to help their patients. Medical schools must shoulder a lot of the blame. They rarely provide training that will help new physicians deal with these and other non-clinical issues. But society – patients and their families – must also accept responsibility. The study said that physicians “are right to put up emotional barriers: no one wants their doctor to be walking around openly grief-stricken.”

There is much work to be done in cracking down on waste and fraud in healthcare. There are clearly many professionals who are gaming the system for huge financial gains. But in righting these wrongs we should not lose sight of the fact that the majority of the physicians we place on a pedestal, especially in end-of-life cases, are just ordinary people with special knowledge and skills. They have feelings and they grieve, too.