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Friday, April 1, 2011

It can't be real

I must be in a dream. It simply cannot be real. First, I read:

Hospitals’ Race to Employ Physicians — The Logic Behind a Money-Losing Proposition - NEJM | March 30, 2011 | Topics: Health Care Delivery

The basic premise of this piece is even though it seems foolish for hospitals to spend lots of money to buy practices where it appears they will continue to lose money well into the indefinite future, there is still wisdom in their actions. It is all about market power. All I can keep thinking about is Milo Minderbinder of Catch 22 fame and the conversation between Milo and Yosarrian.
Y: “I don’t understand why you buy eggs at seven cents a piece in Malta and sell them for five cents.”
M: “I do it to make a profit.”
Y: “But how can you make a profit? You lose two cents an egg.”
M: “But I make a profit of three and a quarter cents an egg by selling them at four and a quarter cents an egg to the people in Malta I buy them from for seven cents an egg. Of course, I don’t make the profit. The syndicate makes the profit. And everybody has a share.”
Sounds like health care reform....

Then comes the announcement of the ACO final rules, with much fanfare from the Feds along with a marquis piece, also published in the NEJM, by Don Berwick ( A series of press releases and FAQ documents made their way into my email inbox. The CMS press release focused on the legalities associated with waivers required to deal with the anti-kickback requirements, sort of exceptions to Stark laws. The proposed rule includes provisions to relax antitrust laws that currently prevent close collaboration between physicians and hospitals. Rural providers and new ACOs with less than 30-percent market share would be given leniency. For larger proposed ACOs, the Federal Trade Commission would have 90 days to determine whether the new entity would violate antitrust laws. However, this sounds like a legal minefield. The waiver of the kickback laws is required to implement the gain sharing provisions but it sounds as though entities will need to put themselves in an Alice in Wonderland realm of ambiguous compliance purgatory:


Centers for Medicare & Medicaid Services
Room 352-G
200 Independence Avenue, SW
Washington, DC 20201
Office of Media Affairs
FOR IMMEDIATE RELEASE Contact: CMS Office of Media Affairs
Mar. 31, 2011 (202) 690-6145

....For the anti-kickback statute and CMP only, certain financial relationships that are necessary for and directly related to the ACO’s participation in the Shared Savings Program and fully comply with an exception to the physician self-referral law.

What is fully compliant? Does that mean perfectly compliant? Talk about exposed and vulnerable? 

I also reviewed the ACO "Fact Sheet". The best way I could describe this is it represented aspirational document. There was no detail but the message was clear; we want better, faster. cheaper. Don't we all.
The Berwick piece in the NEJM is is well summarized by Dr.Berwick himself:
Whatever form ACOs eventually take, one thing is certain: the era of fragmented care delivery should draw to a close. Too many Medicare beneficiaries — like many other patients — have suffered at the hands of wasteful, ineffective, and poorly coordinated systems of care, with consequent costs that are proving unsustainable. CMS believes that with enhanced cooperation among beneficiaries, hospitals, physicians, and other health care providers, ACOs will be an important new tool for giving Medicare beneficiaries the affordable, high-quality care they want, need, and deserve.

The flaw with this entire approach is not what it aspires to accomplish. Who can argue with creating a more patient centric approach to care? The problem is that the approach taken applies both a financial and a regulatory squeeze. He basically admits that no one is sure as to the form which the ACO will take!  Given enough innovators, we can figure out how to deliver care in more creative ways for less money. Trying to do more with less in a stifling regulatory environment which simply sucks the fuel out of the innovation engine and will not work. There is absolutely no guarantee that the era of fragmented care is drawing to a close.  As physicians bail from this grand experiment the fragmentation may be worsened. If you want to improve communication get rid of HIPPA!

I know we are on the wrong track because no where in the conversations I am privy to is the sentiment that what we need to do is simply be driven by delivering better care to patients. There is a huge amount of energy being devoted to figuring out how not to be a victim of this entire exercise and thinking about patients (while discussed) is not central to virtually any survival strategy which I have heard articulated. It is about survival and behavior of people and groups is rarely laudable when survival is an issue. 
Large health systems are positioning themselves to avoid taking a mortal hit, even if it means buying eggs for seven cents and selling them for five cents. Individual practitioners are either hitching their wagons to large entities (whose short term strategy is to not bleed to much) or wait it out, hoping to see the entire initiative crash and burn, or jumping in later after they can define the winners.

I will want to see the actual final rule regulations, once drafted before I can really have an informed opinion. However, my sense is that we have reached a tipping point. The framework of these proposed ACO rules is simply to complicated. It is untested at best and at worst already shown to be ineffective. It will introduce more moving parts into a system which was already too complex. I think the idea is these regulations may be transformational but I suspect they will be transformational in the same way that adding sugar to your gas tank is transformational. They will render the vehicle unusable. It is command and control manipulation at its worst.

1 comment:

  1. As an independent, solo practitioner who will likely remain untransformed by ACOs and other integrative "innovations" conceptionalized by the current administration, I have given little thought to the collectivist notions on how to improve the quality and reduce the cost of health care. However I am acutely aware as a business person that the time, both patients', physicians' and other providers, that is spent in encounters (which includes pre and post face time with the provider) is the basic unit of measurement for economic productivity. Building any organizational structure in medicine must start from this most basic microeconomic consideration. However as with most grand schemes that are imposed from the top down, especially by visionaries or ideologues, the macroeconomics envisioned aren't supported by the calculus of integrating the microeconomic factors. We have actually been down this road before in the early '90's and it is instructive to review the results of that experiment. At that time companies like PhyCorp thought that they could buy up medical practices and through the economies of scale they could offer from running an integrative system profit allowing physicians to practice higher quality medicine being relieved of administrative duties. (Substitute reduce societal costs for profit and you have a model of an ACO.) I considered selling out to PhyCorp as it would be illogical from a business perspective not to do so if they could deliver on that promise. Given though that this large company with its financial sophistication thought that there were productivity gains that I was not realizing myself, I first set about analyzing my practice looking for the inefficiencies I was missing and I couldn't find anything that would enhance the efficiency of the principal and most expensive component of medical care, necessary time that physician, patient and staff spend interacting in person and otherwise. Saving a few cents on gauze, centralized claims processing or electronic medical records simply does not make up for this, unless of course you shortchange the quality of care. PhyCorp I concluded couldn't do this and they validated this analysis some years later when they went bankrupt (which makes me shudder to think of the government de facto running such enterprises). This of course is all just a fancy way of saying that—you can't buy eggs for seven cents, sell them for five and make a profit. Unless of course you suck the contents out and sell them just the shell.