Cui bono? Is healthcare financing about funding providers or caring for patients?

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In a recent blog, GME funding must be targeted to Primary Care, December 10, 2011, I wrote about the fact that the financial interests of hospitals lead them to choose to support residency training positions which are not necessarily (or often, or usually) in those specialties that the nation most needs. I urged that funding from the government for graduate medical education (primarily through supplements to Medicare and Medicaid) include mandates as to the proportions of trainees in different specialties, with a strong emphasis on training more primary care physicians. This is only one area, however, in which the financial incentives to hospitals, and indeed all health providers including physicians, do not always jibe with the healthcare needs of our population.

A recent spate of news articles has discussed changes in the organization and financing of healthcare services. The New York Times recently covered the conflict between the governor of the state of New York, Andrew Cuomo, and the mayor of New York City, regarding the potential conversion of Emblem Health to a for-profit company (Bloomberg Predicts Fair Deal if Health Insurer Gets For-Profit Status, by Thomas Kaplan, December 23, 2011). Cuomo wants it because it could bring as much as $1B in tax revenue to state coffers; Bloomberg is concerned because Emblem is the insurer of the majority of municipal employees and he expects such a move will drive premiums up. But, as the title of the article suggests, he thinks they can work it out. Between them. For the benefit of both the city and state governments. Not, however, for the people insured by Emblem. Emblem was created by a merger of Group Health Insurance (GHI) and Health Insurance Plan (HIP) of Greater New York, two early not-for-profit HMOs, or managed care organizations. Except they were created before either term, HMO or managed care, existed. Back in the 1950s, these were consumer cooperatives, where it was recognized that by cutting out the (for-profit) insurance company middleman, people could have more care for the same money, or the same care for less money. No wonder the majority of city employees enrolled.

Over time, rebranded by the Reagan administration with the new name of “HMO” or managed care, became the de facto standard for US health care coverage. Why Republicans could buy into this vaguely populist or socialist concept was that the new HMOs would increasingly be owned by for-profit insurance companies, which they could literally buy into as shareholders. The savings that came from managing care would now accrue to the insurer, not the patient-owner-members. Many of the long-standing HMOs of the early period (e.g., Los Angeles’ Ross-Loos) were purchased by insurance companies, but there were a few holdouts that remained consumer cooperatives (e.g., Group Health of Seattle and the groups that became Emblem). And then, as we remember, came the consumer backlash against HMOs in the late 1990s, with people furious at the restrictions these organizations put on their access to health care. The mistake, however, was thinking that the problem was the organization of care with requirements for only approved therapies, relatively “closed panels” of doctors and hospitals, and capitated payments. The problem was that they were, and are, mostly owned by for-profit corporations, which increase their profits every time care is denied. This is a very different incentive than when the owners are the patients themselves through a cooperative.

As time went on, even the non-profit HMOs and other non-profit groups like the Blue Cross / Blue Shields that are not part of the for-profit Anthem/Wellpoint, have had to act like for-profits to compete. The advantages have all been for the insurers, which remain very profitable, not for the patients, who find both many of the same restrictions they bridled at in the past, and, in addition, increasing premiums, co-payments, and deductibles. If Emblem becomes for-profit, Michael Bloomberg may be able to work a deal where the city government is spared a major premium increase, but the city workers who are insured by Emblem will not be so lucky. In a typically excellent “Quote of the Day”, Don McCanne, MD, discusses the fact that the National Business Group for Health (NBGH) is predicting major increases in deductibles for all employees. As reported in an article in the Nashville Tennesseean, “High deductible plans on the rise”, by Tom Wilemon, December 27, 2011, “Helen Darling, its [NBGH] president, predicts that by 2016 the majority of all health plans will have high deductibles.” McCanne notes correctly that the members of NBGH are the nation’s largest corporations, mostly Fortune 500 companies, which have historically had the best health insurance coverage for their employees. If these deductibles – the amount a family has to pay out-of-pocket before any insurance coverage kicks in – rise to $1500 a year, it will be much worse for those working for smaller, less prosperous companies.

McCanne also comments on reports from the AMA that Highmark, the large Western Pennsylvania Blue Cross / Blue Shield affiliate, will be purchasing its own health system, where it will be able to profit on both ends, or, at least not pay as much for care. He observes that this will enhance its financial status, but not benefit patients, who will be preferentially locked into care at West Penn. The greatest complaints are from the competing University of Pittsburgh Health System, which believes it will Iose patient revenue from such an arrangement. So the conflict here is between the benefit for one health system versus another. It is not benefit for state versus city government as in the Emblem case, but it is still not about the health of the people. It continues to be about how the money from healthcare is distributed among the various players, including as insurance companies, hospitals and doctors.

My hospital, the University of Kansas Hospital (UKH), has done very well financially. In the most recent “Book of Lists” sent to subscribers to the Kansas City Business Journal (not on line; a copy will cost you $65, or $169.95 for immediate download!), it had the greatest revenue in the Kansas City area, at over $2.5B, more than $1B ahead of #2. The physicians who staff the hospital, faculty of the University of Kansas Medical Center, are seeking a restructuring of the current affiliation agreement to share more of that revenue with the doctors. As one of them, I do not disagree with the concept that the physicians, whose work generates much of the revenue, should share more equally, but, as with West Penn and University of Pittsburgh, this is about who gets what, not about how to provide better healthcare for less money to more people.

Health industry consulting groups, such as the Advisory Board, warn hospitals that there will be major cuts to their income resulting from federal budget cuts and programs such as pay-for-performance (P4P) and “value based purchasing” (this is “value” in the economic sense, that is cheaper, rather than having anything to do with “values”, such as caring for the sick!) Hospitals like UKH worry about whether their up-to-this-point successful strategy of investing in the highest-profit “product lines” such as heart disease and cancer will continue to work in the changing reimbursement system. They sense a pressure, as do physicians, to enter into “health systems”, collaborations, to maximize efficiency and profit (or at least not make much less than they are). There is a certain irony in pressures to re-create the managed care era.

But, because that “re-creation” is still about how hospitals, doctors, and insurers can make money, not about how we can provide the best health care for the most people, it is re-arranging deck chairs on the Titanic. If, when, we hit that proverbial iceberg and the ship goes down, many people will be hurt. Sure, just as on the Titanic, it will be the poor people on the lowest decks who get hit the worst. Then, the middle class. And even some of the rich, and some of the officers will go down. But, if you are a betting person, you bet on the most privileged being the most likely to survive; you would have been right in on the 1912 sinking of the boat, and you’d be right 100 years later in health care.

One day maybe we will develop a health policy that engenders behaviors that are about providing the best health to all of our people.
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Family Medicine in the era of health reform

At the recent Primary Care Access Conference in San Francisco, I was given the opportunity to present the 21^st G. Gayle Stephens lecture. It was a real honor, because it is named for one of the giants of family medicine, and one of the great thinkers on health and medicine of the last half century, in any field. Dr. Stephens was the first director of one of the nation’s first family medicine residencies, at Wesley Hospital in Wichita, KS, and later Chair of the Family Medicine department at the University of Alabama. He was an early and long-time member of the American Board of Family Practice (later Family Medicine) and the author of several of the most seminal articles and books in the field, including “The Intellectual Basis of Family Practice” and “Family Medicine as Counterculture”.  Both of these pieces, along with many others, are discussed in the outstanding “festschrift^;[1; put together by another giant of the discipline, John Geyman, in the January 2011 issue of Family Medicine.

Dr. Geyman says of Dr. Stephens that “He has been, and remains, by far the most original, thoughtful, and elo­quent voice in our field and among the few who best represents the mor­al conscience of the entire medical profession.” I have been privileged to have met, corresponded with, and even to a limited extent collaborated with both Dr. Stephens and Dr. Geyman. I can only hope that my talk was worthy of being associated with Dr. Stephens’ name. In this piece, I  would like to discuss a few of the points I made in that talk related to health care reform, or the Affordable Care Act (ACA); in a later blog I will discuss this in terms of the impact on primary care and family medicine.

Unquestionably the health care reform act, or ACA, is the biggest change in health coverage since Medicare and Medicaid in 1965. It remains deeply flawed, but is nonetheless the touchstone of the opposition to the current administration, as President Obama’s opponents apparently see in it everything that we don’t! The fact is that, rather than bringing us a health system in which everyone is covered, like Canada, or the UK, or Germany, or Switzerland, or Taiwan, it is in large part a big bailout of health insurance companies. And the price that for this – the requirement that everyone have to buy health insurance, the “individual mandate”, is what we hear being attacked, not the insurance companies that demanded it as the price for supporting ACA.

There are some of the parts of ACA that are rather non-controversial (except to the extent that they might not be funded as part of the “don’t fund anything” movement), and are good for family medicine, in the sense that they are good for the health of the American people. These include the increased funding for Federally-Qualified Health Centers (FQHCs), the creation of a panel to review the evidence of effectiveness, if it is left in, and the Primary Care/Health Extension services (which thus far have received no appropriation), among others.

One important component of ACA is the creation of “Accountable Care Organizations”, or ACOs, initially for Medicare patients. They are an effort to promote health by having health providers financially responsible for the health of their patients, that is, to have ambulatory care facilities and doctors, hospitals, nursing homes, and community care facilities coordinate their efforts to prevent illness, treat effectively, and have people cared for in the most appropriate setting, rather than perverse “gaming of the system”, where a failure of ambulatory health care can be a “win” for a hospital when a patient is admitted (as long as they don’t stay too long, or get re-admitted too soon). This kind of structure works well in HMOs, such as Kaiser, or other integrated health systems, but there are likely to be flaws in its implementation; for example, Center for Medicare and Medicaid Services (CMS) administrator Dr. Donald Berwick recently published guidelines for Medicare ACOs in the New England Journal of Medicine, “Launching Accountable Care Organizations — The Proposed Rule for the Medicare Shared Savings Program”.  He says that the ACOs will be “Held to rigorous quality standards (see table). Proposed Measures for ACO Quality-Performance Standards.), ACOs will be expected to be proactive in their orientation and to regularly reach out to patients to help them meet their needs for preventive and chronic health care.”

However, Berwick immediately adds that “Patients who seek care at their ACO will know that their physicians are part of that ACO, but as beneficiaries of fee-for-service Medicare, they will continue to be free to seek care from any Medicare provider they wish. They will not be locked into seeing only particular health care providers.” This sounds relatively benign, and certainly politically wise, but could completely undercut the effectiveness of the program. The reason that Kaiser and other HMOs are effective in managing care that delivers high quality at low cost is because their patients are restricted to where they can seek services; if a Medicare patient who is part of an ACO does not like that they have been “denied” any form of care by their doctor or hospital, no matter how appropriately, can now go “outside the system” to another doctor, hospital, emergency room or pharmacy-based urgent care clinic, all efforts at cost control are at risk. This is, of course, the conundrum: control of costs requires some degree of restriction of unlimited options. It is quite parallel, in fact, to the “individual mandate” that the insurance companies demand, and in this sense they are correct. It will not work to require insurance companies to insure everyone if everyone is not required to have insurance, because then only those who need care will demand coverage, risk goes way up, and so would premiums.

Some politicians and pundits have compared ACOs to the managed care era of the 1990s, and supporters worry it will receive the same backlash from the public that occurred then. I believe that in that period it was not managed care that was at fault but two major characteristics that happened in conjunction with it. The most important was that the entire operation was taken over by for-profit companies, largely insurance companies, that saw benefit to their bottom line by restricting care. The efficiencies of consumer cooperative HMOs had benefited their members; these new entities denied care to benefit their stockholders. It was the corporate for-profit control, not the management of care, that led to consumer dissatisfaction with restrictions on access to care.

The second big problem is related to one that I have discussed before (Red, Blue, and Purple: The Math of Health Care Spending, October 20, 2009), the fact that most people are not sick. In an effort to control costs, everyone was made to jump through hoops, such as gatekeepers and prior authorization, which made them angry but did not do much for the cost, since most people do not use much medical care. Indeed, for at least half the population, you could let them do whatever they want, and they wouldn’t use any significant number of health care dollars. To illustrate this, I am reproducing the graphs from the previous blog.

While there are some things we can do to reduce the risk of unexpected crises –cancer, multiple trauma from car accidents, infants in NICUs – and control the costs of caring for those who have them, the most obvious benefit will be achieved by pre-emptively working with people whose chronic diseases have gotten so bad that they are frequently admitted, often to Intensive Care Units. These are the people who should be targeted for intensive intervention, not only medical but in terms of the social determinants of health, such as in the programs highlighted by Atul Gawande in his February 2011 New Yorker piece, “The Hot Spotters”. Needless to say, such interventions are being funded on a shoestring, while the high-tech interventions get all the money.

 It doesn’t have to be this way. We could have a rational, cost-effective health care system if we start with coverage for all through a single-payer mechanism. We might be able to back into quality despite not having one, but it will be much harder.

                                                               

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<!--[if !supportFootnotes]-->[1]<!--[endif]--> Festschrift: “A volume of learned articles or essays by colleagues and admirers, serving as a tribute or memorial especially to a scholar”