Thursday, September 30, 2010

Big Changes

Chapter 2 of health care reform in Massachusetts deals with efforts to control cost. The main result so far has been a recommendation from a study commission to scrap the traditional fee-for-service method of paying doctors, hospitals, and other providers of health services. Fee-for-service is seen as giving providers an incentive to increase their income by providing services that are of little if any benefit to the patient.

This issue is unique to health care because of the large role that providers, mainly physicians, play in deciding what services patients receive.

Earlier this year, an effort to design a replacement for fee-for-service bogged down in disagreement over its provisions. However, the September 27 issue of The Boston Globe reported in a feature story that the state administration is designing a payment system which it hopes to complete before the end of the year. According to the report:

“The system, called global payments, would require doctors, hospitals, and other providers to band together into groups called accountable care organizations that would split the payments and better coordinate patient care, thereby improving quality.”

The report goes on to identify the issues to be resolved, which include “….how much power state regulators will have over the prices paid providers, the rules for forming accountable care organizations, and whether providers – many of whom profit from the fee-for-service system – will have seats on the board that eventually oversees the potential dismantling of that system.”

There are three other implications that seem to be going unrecognized – or, at least, unmentioned.

One is that moving to global payments will mark the end of medicine as an independent profession. The only physician-controlled organizations with the potential for accepting and administering global payments are the large, multi-specialty group practices, of which there are very few. The others are hospitals and HMO’s. The power of the purse will prevail and the organizations that get the money will have control over the care it finances.

Second, global payments will mark the end of freedom of choice of physician as we have known it. The organization that must provide care within a fixed amount of global payment will insist on determining which doctors provide the care. Patients will no doubt be able to choose from within the organization’s panel of physicians, but not from doctor’s outside the panel.

Third, patients will have to learn to put their confidence in organizations rather than in individuals. They will presumably have some ability to select the organization to which global payment in their behalf is to be made. Having done so, they will be limited to receiving care from that organization – at least for some extended period - unless they pay from their own pocket, which they are not likely to do.

These are big changes – bigger, apparently, than is being recognized.

Thursday, September 23, 2010

Thinking and Acting Anew

I long ago observed that the United States was the first country in the history of the world to overspend for health care. One might fault the distribution of those expenditures, but it is generally accepted that the total amount being spent is excessive. That has never happened anywhere before.

From that, I concluded that none of the traditional remedies associated with health care issues could be assumed to be reliable. Beyond that, the implications were not clear.

I believe, however, that one implication has emerged. Contrary to expectations, the health care reform legislation sponsored by the Obama administration has not proved to be particularly popular. According to a front-page story in the September 21 issue of the New York Times, attempts to repeal that legislation, or frustrate its implementation, is being pledged by a number of Republican candidates in this fall’s congressional elections.

I believe that can be attributed, at least in part, to the unprecedented phenomenon of over-financing. Of the five-sixth of the population who have health insurance, the great majority enjoy generous benefits and are well satisfied with the health services they receive. Cost is high, but not a problem to the individuals since payment is in most cases the responsibility of the employer or of government. The result is that there is little government can do to improve their situations and there are many possibilities for making things less favorable. Of the various improvements included in the health reform legislation, the two most often cited are the ban against denying coverage for pre-existing conditions and raising the age to which insurance companies must allow dependents to be included in family plans. Attractive as these might be, they benefit only a small percentage of the insured population.

A key feature of the legislation is the provision for universal coverage. While this is morally important, it is not a burning issue to the insured and not necessarily popular among all of the uninsured it is designed to help, at least some of whom may prefer the risk associated with being without coverage to the burden of paying high insurance premiums.

In other words, the condition of over-financing seems to have negated the time-honored popularity of expanding benefits and coverage. As Abraham Lincoln said (and as the title of this blog implies), “As our case is new, so we must think anew and act anew.”

Monday, September 20, 2010

More on Accountable Care Organizations

The field of health care has always been vulnerable to fads and buzz words and the latest one is Accountable Care Organizations, with the inevitable acronym ACO. In brief, an ACO is an organization that can be held accountable for the total health care of an individual or a group. It responds to the lack of overall responsibility and accountability that patients experience when they are under the care of multiple physicians and institutions.

The ACO concept describes a role that should have been filled long ago but has not, due, in my opinion, to our persistent reluctance to institutionalize the practice of medicine. We are wedded to the myth that every doctor knows everything about his or her branch of medicine there is to know and can be counted on to do the right thing without supervision. An ACO presumably would counter that belief by creating an institution that would organize and oversee the entire process of health care, including the physician component. The most likely basis for an ACO would be a hospital.

Economist and fellow book clubber Bill Marden recently called to my attention a delightful animated film clip on the subject of ACOs created by Centura Health, a Colorado health system, and distributed by the Internet news agency World News by way of You Tube. In it, a hospital administrator is speaking with woman identifying herself as being from the health reform help desk. The administrator wants to have the health reform legislation explained to him. When told it is a thousand pages long he says he read in the magazine Modern Healthcare that if his system is to be successful under health reform he needs to create an ACO. He has in mind forming a new organization called an ACO with a board that meets monthly. The help desk person says the matter is more complicated than that.

To see the full clip, which is funny and spot on, go to


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