I am struggling with the fiscally conservative approach to health care policy this weekend, since I have just finished reading Greenspan's memoirs and find a number of interesting insights.
Given the apparent anti-competitive stance of my last post on retail clinics, I am feeling a little schizoid.
But the more I think about it, I am more convinced than ever that retail clinics are harmful because they alter the landscape in ways that could be ultimately negative for health outcomes. If there is a need for non-ER, after-hours facilities to provide care for minor medical urgencies, it is partly the result of labor shortages in the face of increasing demand. I'll be blunt; nobody in their right mind will take the lifestyle impairments of 24/7 availability out of their primary care office given the current regulatory burden, liability and low level of remuneration in primary care. There are not enough primary care docs to meet the demand and they are not sufficiently well remunerated to provide the level of care it takes to keep people out of ER. They need more resources, but instead, I see resources going to retail clinics and moreover, benefiting large, profitable pharmacy conglomerates at the expense of primary care.
I am furious at Massachusetts because not every state has a progressive (note I did not say liberal) tradition of protecting the common good and a regulatory structure to support it. It is hard for me to believe that intelligent, well-meaning people with a commitment to public health have such a distorted and short-sighted view of the world that they truly believe they are doing good by allowing retail clinics greater sway. To be honest, I had not previously followed the story and do not now have a full understanding of the arguments in support of retail clinics in Massachusetts, but the result produces a visceral response in me. I am guilty of knee-jerk reaction in this case. Most of my arguments are at Paul Levy's Running a hospital and they do not require repeating here.
One statement in Greenspan's book that I think is relevant for some reason is that "too low a risk-adjusted return implies a waste of resources and productivity." From a macro-economic perspective, I can understand that.
Workers (including physicians), capital and other resources will be distributed according to their risk-tolerance, the risk and return profile of their chosen activity and the depth of their personal resources. Some people take 12 years to finish their neurosurgery training because they perceive that the return on their time and effort (as well as the opportunity cost of deferred income) justifies those resources. The return is measured in dollars and some qualitative sense of their happiness and vocational satisfaction.
Others complete their three or four years of primary care residency and get to the workforce a little faster, expecting to live a somewhat less stressful life and earn a little less for the same effort. But that income cannot be so low that it no longer provides an incentive for working harder. There is a risk that, at some point, reimbursement can become so low as not justify working harder. There is a point, where you just show up for work, do your eight hours and pay the mortgage. Sometimes the headaches of additional patients, hours away from family and satisfying regulatory masters just do not make it worth any effort beyond just staying afloat until retirement.
In the end, you have got to love what you do, enjoy the training environment enough to survive and make an assessment of what you can reasonably accomplish as well as what it is worth in future income and satisfaction.
Those who put in their three to four years to become primary care physicians do not expect the same reimbursement levels as people who have invested a greater part of their lives in training, but as the differential in reimbursement between specialists and primary care grows, two things will happen:
a) more people will gravitate to specialties until primary reimbursement catches up due to the supply-demand equation. There will be shortages as a consequence, frequently manifest by a lack of primary care access.
b) as the demand for primary care grows, primary physicians will simply not be willing to put up with requirements from hospitals, ER's, specialists and even patients that impose greater uncompensated responsibilities and liabilities. In other words, there is no incentive to work harder and longer, to make sure after-hours coverage exists.
Retail clinics provide the opportunity for primary care providers to seek additional revenue, at low risk, low effort and high compensation. It is ultimately good for them. What the heck; if they can compete and do well in the system, all the more power to them.
But wait a minute! Whose system is it? What is the purpose and objective of our system? I did not see the words "to improve the financial health of physicians" in the mission statement of any non-profit in the country, much less that of a progressive state such as Massachusetts.
Surely retail clinics are going to help pharmacies generate prescriptions, revenues and excess profits. It is definitely good for them and probably for the markets and the economy as a whole. But as I perused the Massachusetts Public Health Council Web Site, I did not find that the health of the public's 401K investments was part of their mandate.
I did, however find that the Council is composed of the chair of a University pediatrics department, an infectious disease specialist, an emergency physician, University chancellors, policy wonks and the like. I did not find a single person with academic primary care credentials who could indicate the potential of adverse impact on the primary care workforce. Also the majority of PHC members, necessarily come from the large contiguous urban core of Massachusetts, which is traditionally over-doctored and thus not subject to the same degree of primary care pressure as other parts of the country. Come to think of it, I bypassed Boston in 1996 because their academic primary care presence was just so darned weak. Those who have struggled in the shadow of the center of the American academic medical machine were much braver than I. Boston is simply not representative of the rest of the country, or perhaps even of the the state as a whole.
The thoughtfulness of a group of academics is usually measured from the perspective of their primary research or advocacy priorities, not the search for unintended consequences.
Let's return for a minute to the economics of the situation as an educated non-economist can understand it: "too low a risk-adjusted return implies a waste of resources and productivity." In health policy terms, I would interpret the "return" to refer to the health status of the population as adjusted for their baseline risk determined by age, gender, social and socio-economic status. If we had a good way of measuring the risk-adjusted return of our health investments according to some macro-economic unit (such as a state, for example,) and we found that it was high, we could infer that resources are deployed efficiently and effectively. If the return was low, I think Greenspan would assert that resources are not efficiently distributed amongst various health care activities in a manner consistent with the greatest good.
The return in question is not necessarily a financial one, although dollars could serve as a proxy for health, if one were to consider future health expenses.
Primary care resources are tight, so any distribution into activities that do not provide dividends in measurable indicators of health status will presumably diminish the absolute level of returns in other areas of health care activity. If we were to take diabetes as an example, reduced access to appropriate facilities could potentially result from the diversion of limited resources to retail clinics. We can only imagine the future impact of such a reduction in access on health outcomes for diabetics as well as any number of other chronic diseases.
Retail clinics do not better the health of the population for the amount of resources they consume. They have the potential to reduce congestion in ER's but do not address the underlying lack of a sufficient primary care workforce. Thus, it is possible that ER's will simply become congested with sicker patients over time, because those patients had worse access to primary care and suffered as a consequence. The alternative would have been to provide an incentive to non-profit community health centers (yes, I have a vested interest) to provide longer hours and expand into more areas in the state. I suspect that if they have not been able to do so, it is because they are unable to recruit a sufficient number of primary care providers at their current level of resources. Massachusetts and Boston in particular benefits from some of the highest concentration of federally-qualified community health centers in the country.
Remember, I am a non-economist and just a poor CMO of an FQHC in rural America, hardly able to compete with the best minds Boston has to offer this country. I know it would take several months of work to elevate my argument to the level of academic credibility and formulate a methodology to verify the hypotheses contained therein. But I have read similar arguments before in the academic literature, so I don't think that the Council was entirely ignorant of what we know about primary care and its importance to a health system. For my part, I have to go out and recruit a half-dozen physicians, respond to our local hospitals' needs and do what I believe is best to positively impact the overall health of my community. I hope our authorities let Massachusetts do the tinkering and use our regulatory powers to adjust the competitive environment with an actual health outcome in mind, and not just the health of our hospital emergency rooms.
I'd like to think that's what Alan Greenspan would say.
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6 comments:
Regarding the last 2 days blog, nice contrast and analysis.
You are correct there is no level playing field, and it seems none of the major players (hospital systems, govt payers or private payers) are willing to let the market truly compete. But this contrast is not just limited to 'public/county funded' hospitals or to full retail clinics – however, these examples do seem to be the extreme on both ends serving the essence of their being (charity vs. corporate greed).
An area I would like to mention within the same issue regards small local not for profit hospitals. In our rural area, we have an over abundance of them. I imagine that similar circumstances as described may occur somewhere else in the country.
Nearly every small town nearby (I count 7) depends upon one of these not for profit hospitals as one of their top 3, if not top employer. Unfortunately it seems they have become self-serving local entitlement programs. They provide some of the only good local jobs and enjoy great P.R. due to the local loyalty partly bought by feeding the local folks family, cousin, neighbor, uncle, aunt, friend etc.. As noble as providing jobs is, this environmental/financial excuse for existence often trumps the actual reason for them being extended tax exempt status in the first place...which seems to me is… to serve the MEDICAL needs of their service area. They are so abundant in this location that if one of the hospitals were to close, the only way it would change medicine in the area is that one would only have to drive 15-20 minutes in any direction to find a nearly duplicate facility.
These local entities have historically agreed to a ‘don’t cross the line in the sand’ unwritten agreement, usually not treading on each other’s ground. So unfortunately, the competition factor is muted at best, which of course has hurt quality and produced local fiefdoms.
They seem to operate just as any for profit system does but with the guise and benefit of tax exempt status. Frequently they use under handed anti-competitive tactics alone or occasionally together when the joint motive suits. They have often eliminated and/or consolidated good community programs not operating in the black (based on a cost centered approach) making them into poor quality nevertheless ‘present’ programs. Needed services are frequently under funded and under developed. Physicians have not been recruited appropriately for BASIC primary specialties needed to serve some of the communities (especially ones that are historically poor revenue generators i.e. Psychiatry, pulm critical care). I understand recruitment is difficult, but it is more the effort that I am now to referring. And for this deficit in coverage, they inappropriately depend upon the local ‘for profit’ non-tax exempt, non-employed physicians (especially primary care) to fill the gaps where the hospitals have not or will not serve the need. Yet they always seem to find a way to quickly adopt higher paying procedures and amazingly can afford and justify high cost capital expenditures on equipment for these lucrative cases usually done by favored specialists.
In addition, the amount of capital expenditure and debt financing for medical building and expansion locally is mind boggling (as it is nationwide). The area is not growing population wise, and we all know the boomers are here and coming, but this case seems more a defensive positioning to protect that line in the sand from being crossed as well as in some cases just spending to spend.
Until just the last few months (when 1 facility adopted a hospitalist program estimated cost of 1.2 million), every one of the 7 hospitals for its entire existence depended upon local non-employed physicians to take unattached, self pay, no pay, or Medicaid patients through the Emergency Room. Yet at one local hospital I can verify that every one of the nurses, respiratory therapists, techs, managers and administrators got paid in full, on time throughout the year AND received quarterly bonus’ despite having taken care of those same patients for which the ‘for profit’ physicians received no remuneration or a pittance from Medicaid. Most physicians serve about 400-500 unpaid hours on call per year as part of their ‘medical staff duty’ to the facility. Some hospitals demand double or triple that due to their small medical staff size and complex scheduling. Most physicians in the area take Medicaid.
Despite the over 77,000 hours of unpaid gratis call coverage one of the local hospitals enjoys from it’s non-employed ‘for profit’ physicians, any intrusion on the hospital’s ancillaries or business lines (outside of evaluation and management codes) by a physician is seen by these small systems as an infringement on the entitlement to their fiefdoms’ exclusive referrals-and they do lash out.
The outpatient freestanding or physician group facilities nearby (with like equipment) receive only one third to half the reimbursement for the same MRI, CT, Ultrasounds, and diagnostics these local hospitals do from commercial payers (for the same test!). The sad fact and unbeknownst to the patient is that their 20% responsibility went from 20% of $483 = $96 to 20% of $1250 = $250 just to be supportive to the ‘local hospital’. On the funding/ employer end, no wonder a 44% increase in premiums was received by one of the local employers with 13 covered employees. (Yes, I realize there are other possible reasons also). Today I was shown an explanation of benefits from a physician friend’s wife whom had a CT of the abdomen and pelvis: charges $5200, allowed $3800. This was from a tertiary facility 1 hour away, but the cost would have been a mere fraction of this if done at one of the ambulatory centers or physician groups, more likely in the $600-750 range.
There are no urgent cares or fast tracks, just Emergency Rooms locally. But WHY NOT?...because if you have a headache, you get a CT and labs, and possibly more. Do you hear the cash register yet? The bill is ridiculous compared to the outpatient setting, or urgent care or fast track that they don’t have - just as it is all over in E R’s everywhere. Even if one of those ‘for profit’ docs ordered a CT at his own facility you would still pay a fraction of the bill than that in the E.D. But everyone blames the ER doctor for ordering it, wait a minute he or she doesn’t get the $1200 for the test MAYBE a little peace of mind but no money. And the managers/administrators/hospital utilization reviewers dare not enter into clinical judgment in this case, of course not. But they sure will when the length of stay is exceeded for a low paying Medicare DRG - whether you’ve lived in their community for a month or fifty years. Of course it is the doctors decision to let you go though, wouldn’t want that bad perception placed upon the hospital in a small town. And if one of the local docs decides one of his or her patients needs transferred to a higher care facility or from the ER to a tertiary center, it is not uncommon for employees to take it quietly as a personal affront. Trickle down cultural behavior, yes all the way from the top. It works great in small rural towns where nearly everyone is a dependant. News travels fast. Well-planted ‘news’ and rumors travel faster. The dependant culture serves itself but only a few really know how trapped they are in it. The top wields its power over the hapless who don’t realize what is really going on and how detrimental this mindset and these tactics are to our society and medical system as a whole.
And all this from a ‘non profit’ system. How many other small areas across the country suffer from a similar false market that is enabled by the same entities whom are PRESUMED to be looking out for our best medical interests? The question begs asking. What are these hospital systems responsibilities and in this case whom do they serve? Are they being true to their essence and do they deserve their tax exempt status, all of them or just a few, are they justified because they provide jobs yet divide resources, create inefficiencies and dependency and lower quality of care? Do we just give them a ‘pass’ because hospitals and health are of the good?
Not just the Cleveland Clinics status need be examined in my opinion.
Retail clinics are just a symptom of how screwed up our third party/government prepaid system has become. The other family docs and I know we'll have to deal with them in our area soon. But the whole third party and government system is so full of perverse disincentives, there is no response here to compete based on service or price.
Until most patients shop around with their own money for routine care and third party or government care is reserved for catastrophic care and safety net patients, this will continue.
Regulating retail clinics will do nothing to prop up primary care. It's just a distraction from the real problem.
Both comments make excellent points, but I would like to add to "trouble".
I'm not sure it is the non-profit status that is the most disturbing in rural areas. I suspect that at least some of the hospitals you are referring to have status as "critical access hospitals."
The significant subsidy is that these hospitals are allowed cost-plus reimbursement and are thus spared the financial pressures of most urban hospitals. Without this subsidy, these hospitals would not survive. Without these hospitals, local populations would have to travel 25 miles or more (one of the statutory requirements to be a CAH), which can represent a significant hardship not to be belittled.
The sad adverse outcome is that they become uncompetitive. You cannot blame their administrators for vigorously asserting their competitive advantage.
I could blame physicians for not asserting their advantage, but I know they are aware of certain ethical prerogatives that bind their hands. Therein lies the crux of an uneven competitive playing field. Physicians cannot or will not assert their competitive advantages because it is people, patients and communities who will suffer. Hospitals don't seem to care as much.
Good point.
You are correct 3 of the 7 are CAH. 2 of the 3 I personally have no idea how they qualified.
You also make a great point at physicians' ethics being a barrier in exerting market advantage.
Whether out of true concern for patients they abstain or as a rationalized guise for just not wanting to rock the boat, get involved, be confrontational or competitive until the needed change is so acutely needed and painful to them personally that they have no other choice. The pain and pleasure principle. In that regard, they don't seem so caring except about themselves to delay
In my experience there usually are a variety of reasons they delay. At the top of the list is being lost in the 'busy' work and daily grind. A close second is their current comfort level and risk plus confrontation aversion. Crisis usually is the only time the average doc stops to honestly think about the future and then in the heat of passion.
The sad thing is that PCPs are under such incredible volume pressures that they may be losing ground on keeping the population well. Which provides better care: a 5 minute interaction with a flustered Family Doc or 20 minutes with an NP in a retail clinic? The importance of the medical home is unclear when the patient experience is so poor. The Retail Clinics' real competition is retainer medicine. And I hope that movement really takes a foothold over the next few years. Living off the grid is pretty great... and my PCP is such a happy person.
You may be right, but again the concern would be the distribution of resources to maximize the improvement in the health of the majority.
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