Saturday, July 25, 2009

Integrated Health Systems or Thinking Inside the Box?

The health reform debate has generated input from a wide variety of sources, many of whom have usually been content to stay on the sidelines and collect their money. Among these are hospitals and hospital systems; the best known are the integrated hospital systems that have been getting a lot of publicity for controlling costs, like the Mayo Clinic in Minnesota, the Geisinger Clinic in Pennsylvania, the Cleveland Clinic in (duh!) Cleveland, Ohio, and on a smaller scale the Bassett Health System in Cooperstown, NY, which is featured in the July 25, 2009 New York Times article “Hospitals shows a way to save: doctors get salaries, not fees” ( One thing that they allhave in common is that they are integrated health systems, in which the physicians are often salaried and thus not motivated to perform unnecessary tests or procedures, have patients come back more often, or repeat tests because they do not have access to them (in such systems, there are electronic records giving all physicians access to the patients’ records). In such systems, the benefits achieved are not only those of large scale, but of recognizing benefit to the overall system rather than to each component. Thus Bassett, located in a town more famous for the Baseball Hall of Fame (and, IMHO, one of the most beautiful places in the country), “…has opened 13 clinics in schools around the region. The clinics lose money, but Basset is considering opening 14 more.” Because they are good for the health of the community, but also because they may be good for the bottom line of the entire enterprise. Many policy makers are looking at such models, and wondering why these cannot be adopted on a more widespread scale.

Of course, they could be, but it would take the appropriate incentives. Right now, most health care is delivered by doctors in individual practices or small groups, clustered in metropolitan or suburban areas where there are lots of insured people and where the doctors like to live, using individual hospitals that are usually non-profit although increasingly owned by for-profit companies, with each component looking at what is best for its individual bottom line. “Medicine is the last cottage industry,” the Times quotes Jordan J. Cohen, MD, president emeritus of the Association of American Medical Colleges (AAMC), as saying. I have written extensively about the need for more primary care, as well as the more appropriate geographic distribution of physicians, and the challenges faced in trying to recruit students to even enter primary care residency training, not to mention locate in underserved areas.

A large part of this is the huge discrepancy in the amount of money that can be made in primary care compared to subspecialties, and this is not being addressed effectively at this time. Thus, not only do medical students choose specialties that may be more lucrative, but hospitals and hospital systems choose to both recruit patients who are well insured and emphasize care of diseases that are profitable. The health reform debate has definitely focused on trying to find ways to cover the uninsured, but has just begun to look at the latter. Most hospitals, including my own, have developed strong programs in cardiac care, cancer care, and neurosurgery. These are important conditions to treat, but so are pediatrics, psychiatric conditions, obstetrics and many others. What makes those first three so attractive to hospitals is that they – shock – make money! This is entirely due to a reimbursement system that pays a lot for procedures (cardiac care) and tremendous mark-ups for chemotherapy drugs (cancer care). That’s right; the reason a hospital builds a brand-new cancer center to attract patients from St. Elsewhere is because Medicare – and other insurers – pay a big markup on chemotherapy drugs. Sounds a little less noble that way, huh?

Even my hospital, the University of Kansas Hospital, has issued a “White Paper” on Health Reform. Although public, it is not on line and so I’ll have to summarize it. In essence it says: We support health reform. We believe the insured should be covered, both for moral reasons and because we take care of a lot of them and they cost us money. We are not even against a public option, because we can’t figure out any other way that would really cover the uninsured. BUT – don’t base it on Medicare, because Medicare doesn’t pay us enough; if everyone were covered by Medicare, we’d lose money. This is a logical, if self-centered approach, but it is so deeply within-the-box thinking that it can become emblematic of why health reform will never be successful if it tries to satisfy every “player” – including providers such as hospitals and doctors, not to mention pharmaceutical and insurance companies.

The University of Kansas Hospital is not a bad hospital; by most standards it is a very good hospital, as hospitals go. It has, by dint of major effort over the last decade, risen to the top level of hospitals on most measures of quality of care. It has high patient satisfaction levels. Its census has gone up as most other area hospitals’ have gone down, and not with uninsured people (despite its name, and the fact that it is owned by a “quasi-public” board, it is not funded by state or local government for patient care). However, it does pursue the most profitable “product lines” of cancer, heart disease, and increasingly neurosurgery. It supports physicians who practice in specialties that bring in large dollars. It worries, in a narrow sense, about Medicare reimbursement, but in this way is demonstrating the most “inside the box” thinking.

So, while the integrated health systems of Mayo, Geisinger, and Bassett can work very efficiently, and even satisfy doctors on salaries, taking (perhaps) a loss on primary care but making it back on (to some degree) cost-savings or (to a larger degree) specialist and hospital reimbursement down the most are the dominant players in their market; big organizations in small towns. To make this work in larger communities, to make New York or Los Angeles or Boston or Chicago or Kansas City have health systems that look more like Cooperstown, NY than McAllen, TX (see this blog “Medicare costs: all politics are local”, June 11, 2009) is going require government policies that encourage communities, as well as individual health systems, to provide all the kinds of care needed by people in the community to all the members of the community who need it, rather than trying to cherry-pick people based on insurance status or diseases based on profitable reimbursement policies. As important, it will require incentives (or disincentives) to competition that creates unnecessary excess capacity in a community, but rather replicate the efficiencies that exist in the smaller-community systems in which Mayo, Geisinger, and Bassett are located.

To make this happen can be either simple or complicated. Simple would be learning from both other countries and from our own varied experiences in the United States. We would authorize hospitals and hospital systems to provide specialty services only to the extent that they are needed in the community (because existing services are inadequate in volume or quality) and not because “if we make a prettier cancer center we can steal the patients currently getting perfectly fine care elsewhere to come to us”. We would make hospitals operate within a negotiated global budget, which had separate operating and capital budgets (so they couldn’t scrimp on your operating budget to save money to buy new equipment), so they could allocate their resources to most effectively meeting community needs. We would decrease the incentives to do unnecessary excess procedures, while ensuring that the cost of necessary procedures are covered.

We would decrease (possibly through salary, although it can be done using other strategies, such as a single-payer system) the enormous income differences between specialties so that students enter the specialties that people will need rather than those of financial opportunity. We can have a coordinated system that has control and can encourage of desirable new technologies, use of evidence-based methods and interventions, and control of excess. Contrary to what the University of Kansas Hospital says in its “White Paper”, having EVERYONE in Medicare would be absolutely the BEST solution, as part of an overall health reform plan. Yes, current Medicare reimbursement for some services would have to go up – while others would probably have to decrease – but it would put everyone in the same situation where we had a logical and coordinated basis for payment, and would eliminate the current evils of providing some services rather than others, or marketing to some people rather than others, based upon the reimbursement for one or the insurance status of the other.

Complicated would be the way that we are trying now. Which makes more sense?

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