Medicine

The Obama care runaway train.

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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.

Physician as Novelist

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Dr. Keilson devoted his life to his patients, many of them Jewish children traumatized by the war and separation from their biological parents, some of whom the Nazis had murdered. He wrote a groundbreaking and widely translated study of “sequential trauma.”

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The novels are partly autobiographical, sparse but intricate and psychologically compelling. “The Death of the Adversary” portrays Jewish life in Germany as the Nazis gain control, but the words Jew, Germany and Hitler, referred to as “B,” never appear. The protagonist, a young Jew, feels distanced from both his own people and current events. He develops an intimate obsession with B, understanding that, as Dr. Keilson said, “B needed the Jews to project onto them what he dislikes in himself.”

(Link: NYT) Has anyone read the novels of Hans Keilson? I am intrigued.

Update: Are there other physician novelists that CBz readers care to recommend?

Paying for Health Care

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I have found a lot of confused thinking on the right lately regarding how to pay for health care. The left is hopeless but items like this, complaining about the FDA taking Avastin off label for stage four breast cancer don’t get to the heart of the matter. What is the right process to figure out whether you’re going to undergo a medical treatment?

Even if you are independently wealthy and have no insurance to complicate things you would not limit your consideration of treatment to just the medical discussion with your doctor. Your financial team would come into play as questions of bankruptcy, how much this is going to impact your estate, etc. are going to affect your decision. And in that discussion, if your sole heir starts getting creepy and talking down all the expensive treatments, you have a problem.

Putting insurance into the equation doesn’t change the conversation. It just adds a large cast of characters to the discussion and some extra money that you don’t control. The possibility of somebody going creepy and acting in their own best interests but not yours is still there. In fact, the more distant the 3rd parties, the more likely it’s going to happen. Add in the government and the chance explodes.

The FDA and Medicare are acting like the creepy heir on the make and there are a lot of people who sense it without being able to articulate it. Nobody can *prove* anything, but the vibe is not good.

The trend to cash medical practice

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Some time ago, I did a post on my own blog about doctors dropping out of Medicare and many quitting all insurance. I really got thinking about this after the American Geriatric Society meeting in Chicago last year. I met a woman geriatrician, the only fellowship trained geriatric specialist in central Iowa. She had quit Medicare. That sounds a bit suicidal if all your patients are Medicare age. What had happened was she was being harassed by Medicare because she was seeing patients too often. Many of them were frail elderly living at home. She dropped out and began charging her patients cash for services. She was making a decent living after a year and was happy with her decision. I don’t know how many realize that geriatrics, as a specialty, is a university subsidized field. There is no private geriatric practice because the doctor can’t survive on what Medicare pays. She tried and had to quit. She is doing it on her own now.

The Weekly Standard has an interesting article this week on this trend. The doctor is not near retirement , as many of the folks I had previously talked to were. It took a lot of guts for him to start out this way and he explains why.

There are a couple of errors in the article and I will point them out.

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Lean practices and starting a trauma center.

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The discussion of the pharmacy reorganization got me thinking of the trauma center that we started in 1979. That was well before I learned about lean practices or the Toyota method but I think we used a number of their principles anyway.

When we started our trauma center, we did something a bit like your pharmacy project. We were a small hospital (120 beds) in a new suburban area with the ocean on one side and national parks and mountains on the other. Orange County narrows down to a triangle which ends at San Clemente where the Marine base begins. We knew the county was going to regionalize trauma. A study had come out suggesting that too many people died because “the golden hour” was lost in trying to get doctors and operating rooms organized, especially at night.

Several large hospitals planned to enter a competition to qualify as centers; one of course, was the UCI medical center. None of them was within 25 miles of our hospital. We didn’t like the idea of seeing the injured patients, some of whom would be neighbors, being taken that far and we looked to see if we could set up a trauma center for our community that would pass muster with the EMS survey team. First we had to see if the hospital and medical staff would support it. My partner and I couldn’t do it alone.

I did a study of the finances of trauma. The stereotype is a drunken insolvent who is stabbed or shot. Our community is located along I-5 where it runs from Los Angeles to San Diego. We are between mountains and the sea. I took the records of all emergency admissions, who went to surgery or who were discharged with a “surgical” diagnosis and who went to ICU. Some of those were general surgery but by using a screen we got down to the trauma cases. I found that 85% of them had some sort of insurance. This was largely because most were auto accidents. Even if people don’t carry health insurance, somebody may have medical benefits with car insurance.

We presented this to the department of surgery and they turned us down flat. The vote was something like 33 to 2. We went to the Board of Trustees. At the time, the hospital was owned by a partnership, one of the dreaded for-profit hospitals. The Board was easily convinced that this was something we needed to do if this hospital was going to grow. Southern California is cursed with many small hospitals and few big ones outside of Los Angeles. I knew a vascular surgery group, of three men, in the San Fernando Valley that went to 12 hospitals. One of the reasons I moved to Mission Viejo was to get out of Los Angeles.

Anyway, we had the hospital on board but not the doctors. The hospital decided to make the trauma center a contract service like the ER. My partner and I would run it. The hospital hired a city planner to draw up a proposal for the county. They gave me a copy when he was finished and it was the size of a Chicago telephone book. I read through it and it sounded like a proposal for a shopping center. I rewrote it. A lot of it was useful, like traffic analysis, but the vast majority didn’t answer the right questions.

Then we had to figure how we could do this and not go broke. There were two of us. We would call other specialists, like orthopedists and neurosurgeons, as needed. That’s how we got around the surgery department. There were grumbles but they faded as the orthopods began to realize that trauma cases paid well, mostly. Then we figured out who is in the hospital at night. The other trauma center candidates all promised to have a surgeon and anesthesiologist in-house 24 hours per day. We could not afford that. We promised that the surgeon and anesthesiologist would arrive within 15 minutes of being called, usually before the victim. The ER doc would be there. That was just as Emergency Medicine was becoming a specialty and our ER docs were GPs.

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