Sunday, July 09, 2006

Betting on Hospitals

Separation of its institutional and professional components has long been an established feature of our health care provider system. We recognize the distinction in the separate identities of a hospital and its medical staff. We see it in health insurance, with Blue Cross paying hospitals and Blue Shield paying physicians. Similarly, Medicare’s Part A covers hospital services and its Part B, physician services.

As health care has come to depend more on process and less on individuals, that historical bifurcation has become increasingly problematic and may now be the single most significant barrier to meaningful health care reform.

Actually, the boundary between the two components has been breaking down for some time now. The courts have long held hospitals financially accountable for the malpractice of physicians on their medical staffs. Employment of physicians by hospitals, once anathema to the medical profession, has become commonplace.

But we do not yet have agreement on who should end up in charge.

Historically, it has been assumed that health care ought to be under the control of the medical profession. Politicians love to carry on about how we have to get medical decisions back into the hands of doctors and their patients. A number of states have “corporate practice” laws designed to protect the profession from institutional control.

The cover story of the June 26, 2006 issue of Modern Healthcare was about an attempt by Carilion, a non-profit hospital system based in Roanoke, Virginia, to convert itself into a physician-run clinic along the lines of the Mayo Clinic, which operates its own hospitals. A later article in that same issue was about for-profit hospitals that invite their physicians to become owners by investing through syndications.

There has also been a growth in the number of physician-owned hospitals, particularly in specialties like orthopedics and heart surgery.

All these are consistent with the historical assumption.

But institutional jurisdiction over medical practice has been increasing, as well, with more and more physicians being employed by hospitals as mentioned above. Further, most of the recent quality improvement initiatives – all of which involve changes in medical practice, have been hospital-based.

So who will win out? I am betting on hospitals. Only hospitals have the structure, experience and qualification needed to carry out the role. Some, like Henry Ford in Detroit and the Shelby County Health System in my Iowa home town, have already done so. The medical profession is not organized to take it on, with the exception of places like Mayo which are likely to be the last of their breed since the circumstances that led to their creation cannot be duplicated.

Whichever way it goes, the issue needs to be settled so that we can get on with the process of redesigning the system.

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