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Sunday, November 13, 2011

Untended consequences of administrative payment schemes: A tale of two specialities

Rheumatologists and Orthopedists both deal with human muscles, bones, and joints. That is where all similarities end. One specialty has huge margins, is highly lucrative, and has become hyper-specialized. The other has negative margins, is financially a mess, remains the realm of the generalist, taking on whatever is  thrown at them, generally whatever other physicians do not want to deal with. How did this happen? It is a simple answer (but not so simple solution) - administratively set prices which value one specialties activities much differently than another.

For orthopedics, lucrative reimbursement for focused, value-added interventions combined with strategic incompetence in assuming any long term responsibility for caring for chronically ill people is a winner for building empires. This model has allowed for hyper-specialization. Orthopedic surgeons  tend to focus on one joint or segment of an extremity (wrist, ankle, elbow) making it relatively easy to deflect unwanted business. Payments and business models may be so lucrative that you have the margins to underwrite the hiring of non-proceduralists who can screen a larger patient population and cull those who can be shunted to the operative engine, being careful to not to assume care for anyone who requires any high risk drugs such as immunosuppressives or biological agents such as TNF blockers.

In contrast, Rheumatology is the realm of the chronically ill and medically managed. a low margin activity because of the random financial violence created by administrative pricing. Rheumatologists are called upon to care for everything ranging from gout, to fibromyalgia, vasculitis, myositis, RA, Behcet's syndrome, systemic lupus, or chronic depression.  Rheumatologists are called upon to treat any inflammatory disorder of any organ system where focused and procedural specialists have perfected the art of strategic incompetence, unwilling to cultivate and maintain particular, but low margin expertise, required to care for patients who have organ specific disease affecting the organ of their interest. Better to simply dump this responsibility on the unfortunate Rheumatologist.  Also be sure to berate your local rheumatologist when they fail to willingly accept all the low margin work dumped on them. 

Without sufficient margins, there are insufficient funds to build an infrastructure with any semblance to the infrastructure that supports orthopedics. This includes sufficient incentives for physicians to enter the field in the first place. Thus, shortages of Rheumatologists prevents the development of specialization and the inefficiencies that may come with this, aggravating the financial stresses even more. Why is it acceptable for one set of specialists to have focused expertise and deflect difficult to manage (and coincidentally low margin activities) to a more poorly paid specialist who are financially punished for maintaining remarkably broad expertise? It is justified on the basis of the financial rewards, created through an entirely artificial world of administratively set value.

Where it might make sense for leaders in medicine to take this on, recognizing the dysfunctional and unjust nature of how value is arbitrarily assigned. Such a road is a highly risky road. Why take on such a difficult, long run challenge (to fundamentally change the rules of the game) with only possible returns.  It has been much easier and less risky to figure out how to exploit the rules in the short term, even though it has created bizarre and indefensible holes in the health care delivery system. No wonder why it is increasingly difficult to find Rheumatology expertise? Rheumatology is not alone in this fate. Where we find insured patients with medical needs and no one to deliver them, you have likely found the mischief created by administratively set prices, sending misinformation about what patients actually need and where value to patients lies.


  1. I would hardly say that subspecialization, example hand sx fellowship following an orthopedic residency is any less complicated than maintaining a 'broad expertise' in medically managed illnesses. The intracacies of hand sx are by definition complex.

  2. As are the intricacies of diagnosing and treating any single complex disorder where the task is also completed over the course of many years, also taking into account any co-morbid states which may rear their ugly heads.

    We are in agreement that these represent complex tasks, the only difference being one set of tasks tends to be valued more highly through the payment system than the others.

  3. Yes, but part of that value is tied up in the cost of performing that service. Surgeries and procedures require more overhead (techs, assistants, supplies, etc) so that is part of the increased perceived value.

  4. Value is defined as outcomes divided by cost. Health care providers don't measure and catalog outcomes that matter most to patients--that is, 1) the cycle time and disease severity, 2)timing and severity of complications, 3)iatrogenic events, 4)recurrence of disease, 5)incidence of patient noncompliance, 6)quality of life, and 7)mortality-- over a full cycle of care...much less how much all that costs!

    Without that data, discussions regarding what actions/procedures bring more value to a patient are moot.

  5. I agree with the e-doc that you are confusing value with inputs. You are not alone in confusing these two concepts. One of the great controversies of 19th century economics was between two schools of thought regarding where value comes from. One school thought value could be measured objectively through looking at inputs (objective school of value) while the other school viewed that value was completely subjective (subjective school of value). The objective school of value served as the intellectual underpinnings of the works of Karl Marx as well as the Resource based relative value scale. The subjective school of value is the basis of market based economies.