Posted by Michael Kennedy on October 26th, 2010 (All posts by Michael Kennedy)
There is talk of repealing Obamacare if the Republicans take over Congress on November 2. Of course, that is unlikely with President Obama ready to veto any repeal legislation. “OK, we will defund it,” is the response. I doubt anyone realizes how fast this is moving and how difficult it will be to alter the course of this program.
A week ago, I posted on my blog a set of new rules that are being implemented for physician reimbursement. I review workers compensation cases as a part time job. The company that employs me has now come out with a new line of business to review cases for Obamacare. I have been asked if I would be willing to review cases on a 24 hour timeline. This includes weekends. I have spent 40 years reviewing cases for Medicare and the state medical boards for poor care. Now, I am being solicited to do concurrent review on a 24 hour basis for healthcare. I do some concurrent review for workers comp cases but the timeline is usually 3-5 days. Why weekends ? Does this mean that care cannot be provided without approval ?
The pace of change is breathtaking. Today, the Wall Street Journal explains.
A wave of consolidation is washing over the health markets, and the result is going to be higher costs.
The turn toward consolidation among insurance companies is not new, and neither is it among doctors, hospitals and other providers. Yet the health bill has accelerated these trends, as all sides race to anticipate and manage political risk and regulatory uncertainty. This dynamic is leading to much larger hospital systems and physician groups, and fewer insurers dominated by a handful of national conglomerates. ObamaCare was sold using the language of choice and competition, but it is actually reducing both.
The first surge will come among the 1,200 insurers doing business in the U.S., given that a major goal of ObamaCare is to convert these companies into de facto public utilities. Those regulations are now being written—and once they’re up and running some medium-sized carriers will collapse under the new mandates and higher overhead. State insurance commissioners warned the Administration this month that “improper or overly strident application . . . could threaten the solvency of insurers or significantly reduce competition in some insurance markets.” They also implied that bankruptcies are likely.
With these headwinds, investors and Wall Street analysts are now predicting a lost decade for health insurance stocks. But it may be more accurate to say that there will be a lot of losers and some very big winners. Mergers and acquisitions will increase dramatically once companies get a better look at the regulation and figure out the valuation of M&A targets. Larger carriers will swallow smaller ones quietly before they fail.
The pace of change is far more rapid than is appreciated.
Across the country, providers are building giant hospital systems and much tighter doctor alliances like multispecialty groups to get out ahead of a concept known as “accountable care organizations,” or ACOs. To modernize the delivery of medical services, ACOs would encourage doctors to work in teams to use resources more efficiently, streamline treatment and improve quality. The model is the Mayo Clinic and other large integrated systems.
The Mayo Clinic has concluded that it cannot afford to treat Medicare patients. The Phoenix branch of the Clinic has already informed patients that they will accept no more Medicare. The model does not think it will work.
At the moment ACOs are only a gleam in some bureaucrat’s eye, and no one has a clue how they’ll operate in practice until the government releases a working regulatory definition next year. Yet the percussive effects are already being felt across medicine.
Hospitals are now on a buying spree of private physician practices in the rush to build something that will qualify as an ACO. Some 65% of doctors who changed jobs in 2009 moved into a hospital-owned practice, while 49% of doctors out of residency were hired by hospitals, according to the Medical Group Management Association. In its 2010 census, the American College of Cardiology reports that nearly 40% of private cardiology groups are currently integrating with hospitals or merging with other practices.
I spent a few minutes researching the doctors who appeared in white coats to support Obamacare last spring. Those who really were doctors were all hospital employees. Most of them had been hired right out of residency.
Doctors are selling because complying with the ever-growing list of mandates has become more cumbersome; and while staff physicians on salary do gain predictability, they also lose the autonomy of independent practice. The other problem is price controls in Medicare, which are about 20% below private payments for doctors and 30% lower for hospitals. Hospitals are also scooping up practices to lock in referral sources and make up for ObamaCare’s Medicare cuts. As it is, two-thirds of hospitals lose money today on Medicare inpatient services, according to Medicare.
This is an impossible situation and the Medicare patient will become indistinguishable from the Medicaid patient, a burden on the system to be treated by “physician extenders.”
The changes are coming like a runaway train and they will change American medicine irreversibly. Private medicine cannot afford to care for the discounted Medicare patients. Obamacare will convert private care to Medicare. Every one will be a charity case except for the gentry class that votes for Obama. University Hospital physicians may feel that they are immune to these changes but it has been known for 50 years that the value of salaried university physicians is directly related to the income of private physicians. In fact, the university physician has no overhead but they can always tell the administration that they can leave and earn as much, if not more, and this has given them a lot of power.
When I was in training, my surgical training program had three full time faculty members. Now, the same program has 90 full time members. In the same interval, their success in having graduates pass the American Board of Surgery has declined. That may or may not be significant but the culture of medicine is changing rapidly. Many physicians no longer recommend medicine as a career for their children. What this all means, I don’t know. What I do know is that it is coming very fast and few people realize it.