Friday, August 31, 2007

The GME Scam

Graduate Medical Education (GME) involves the training of medical and surgical residents – often referred to as house officers. As medicine began to specialize many years ago, there was a need to provide more clinical training to fledgling physicians than they could get during their four years of medical school.

A happy bargain was worked out. In return for serving as physicians to poor people (then referred to as “indigent”), house officers would receive training at no cost to themselves. The practicing physicians were happy to provide the training in return for relief from what was then their obligation as professionals to care for the indigent. Hospitals served as institutional hosts for this arrangement, providing house officers with room, board and small stipends. When I began my career at the University of Chicago in the 1950s, interns were housed and fed within the hospital and paid a stipend of $50 per month. They were not allowed to be married. Residents were paid a little more, lived off-campus, and could marry (one supposes to wage-earning wives).

Private hospitals in those days had the practice of admitting indigent patients to what was called “the service,” which meant that they would be cared for by house officers. A common rule was that no private physician could charge a professional fee to a patient being cared for on the service. The intent was to prevent private physicians from collecting fees for work done by house officers who were being paid by the hospital.

Medicare changed all that. Prior to Medicare, the service was populated to a large extent by seniors. But Part B of Medicare paid professional fees, which effectively did away with the old service arrangement. In order to capture those fees, group practices of one form or another were formed. A consequence of that arrangement was to end the long standing practice of restricting the practice of house officers to the indigent (a term which then went out of use).

A practical consequence was that private physicians became able to collect professional fees for work done by house officers. Medicare made a number of efforts to stop that, but without much success. There has always been a way to satisfy the letter of the regulations while still achieving the result.

The attractiveness of this arrangement to private physicians is obvious, and hospitals have been under continuing pressure to hire more and more house officers. The intense demand thus created, together with other factors, gradually increased stipends until it can now be said that house officers are being paid a living wage – a marginal living, perhaps, but a living.

During the late sixties and the seventies, when pouring money into health care was politically popular, somebody got the idea that Medicare ought to reimburse hospitals for the cost of their GME programs, including the cost of paying house officers. The formula devised for doing so got to be so generous that at one time GME programs actually made a profit. At the same time, the private practitioners were raking it in from Part B, as well, but nobody bothered to pay attention to that.

The scam is that Medicare has been paying twice for the services of house officers – once by its GME payments to hospitals and the second time by professional fees to private physicians. To the extent that hospitals had built the cost of GME into their regular charges, it might be said that the services were being paid for three times.

Medicare is now proposing to bring at least part of this to a halt by discontinuing its program of GME payments. Hospitals and doctors are complaining bitterly, of course.

But all scams end eventually and perhaps those who have benefited from this one should be satisfied to be happy that it lasted as long as it did.

Tuesday, August 28, 2007

Insulting Boston Hospitals

Yesterday’s Boston Globe provided a striking clue on what ails our healthcare system.

Page 1 of the Health/Science section featured an article by veteran health care reporter Stephen Smith on what patients can do to protect themselves against acquiring infections while in the hospital.

Of the nine suggestions offered, seven involved monitoring hospital staff to make sure they perform their duties properly. One was to check that the beds of patients on respirators were set at a 30-degree angle. Another was to insist that body hair be removed with clippers rather than razors (one marvels that razors would even be available!!). Still another was to require that before the insertion of an IV line, the surrounding area is properly disinfected.

The clear implication is that hospitals cannot be counted on to provide care in a professional and disciplined way. One would think that in Boston of all places, the supposed Mecca of all things medical, healthcare providers would be embarrassed out of mind to have their performance so impugned. But there was no sign of that.

After many years of adulating health care providers, the public seems to find it hard to acknowledge their sloppy practices and to insist that they do something about them. When that changes, the pace of health care reform will pick up.

Saturday, August 04, 2007

Market versus Planned Economy

The socialist concept of a planned economy may have been pretty well abandoned around the world, but it is still alive and well in the U.S. health care system.

Recent years have seen the development of ambulatory surgery centers (ASCs) - free-standing facilities in which surgery is performed on patients who do not have to remain in the hospital overnight. Hospitals understandably have objected to losing this financially lucrative business, offering up a host of arguments as to why privately owned ASCs are a bad idea. The American Hospital Association has lobbied strongly against them.

Proponents of ASCs claim they are more efficient than hospitals. Medicare must agree, because the rates it has been paying ASCs are 83% of the rates it has been paying hospitals for the same services. Now there is a proposal to reduce that to 65%. All of this is reported in the July 23, 2007 issue of Modern Healthcare. The reason given for the change was “to make [the ASC payment system] more in line with hospital outpatient departments or physicians’ offices.”

How and on what basis do such decisions get made? A clue is provided in a later article in the same magazine about a proposal to revise the wage index system that Medicare uses to set the rates it pays for services in different parts of the country. When asked to comment, the head of the Federation of American Hospitals declined, suggesting that “a political debate about this” would be premature.

In other words, decisions by Medicare about payment rates are political decisions. The justification offered for them may include a boatload of numbers, but at bottom the decisions are political.

Many are apprehensive about subjecting the health care economy to market forces, believing that matters of sickness and health ought not to be dealt with in terms of profit and loss.

But the alternative to the market is politics. In the market, economic strength matters. In politics, it is political strength. The argument, therefore, ought not to be only against one or the other, but why one is better than the other.

Friday, August 03, 2007

BS Award

There is nothing unusual about spreading BS through the print media, but some people show exceptional talent that deserves recognition.

I bestow my personal award on Tommy Thompson, who authored a one-page article titled “Quality is in our hands.” It appeared in the July 30, 2007 issue of Modern Healthcare.

Thompson is a former governor of Wisconsin and U.S. Secretary of Health and Human Services. Currently he is a Republican candidate for President.

He begins by referring to the Institute of Medicine Report on the up to 98,000 annual deaths caused by medical errors. He states that “consumer education, price transparency, information technology and coverage for the uninsured are the tools required reduce those staggering numbers.” How price transparency and covering the uninsured relates to medical errors is left to our imagination.

He goes on to claim that “A primary reason that U.S. healthcare costs are rising at an unacceptable rate is that Americans are simply unhealthy” and that “Seventy-five percent of the costs of American health are from preventable chronic disease.” He doesn’t bother to say how he came to those remarkable conclusions.

He argues that healthcare information technology can result in lower costs but then suggests that providers can’t afford to invest in it. One would suppose that the savings from lower cost would be the source of funding for the technology.

Other examples from the article could be cited, but these are enough to support Thompson’s qualification for my award.

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