Money in Medicine
I was in a meeting recently with an organization whose members are working hard to try to improve the care of dialysis patients. Like many such groups, they are working on a government contract where the metrics are specified. I had pointed out one of the metrics was counter-productive and meeting the contract goals was being thwarted as other organizations responded appropriately to their own set of challenges. Later, I pointed out some of those pressures being faced by younger physicians, most of which involved how they are paid. During the meeting another person made a perfectly reasonable suggestion about resources that might be helpful. He misunderstood when I pointed out his suggestion would further impede the organization’s ability to reach its goal and said: “You said it’s all about the money.”
Of course, it has always been true that “no margin means no mission,” but my colleague was correct; the point I was making is that keeping the organization solvent by meeting its contract goals does not necessarily further the mission of good patient care. Now my grandfather used to complain 100 years ago about his colleagues who chose to make a good living push mood-altering drugs to rich women rather than try to alleviate suffering and disease regardless of how much (or little) they were paid. So, money has always been a part of medicine, but I think it is qualitatively different now, probably because it is quantitatively different.
ProPublica has just published a story about the travails of a relatively young man who needed hip replacement. Since he had insurance with a percentage co-pay and was an actuary for health insurance companies, he did all the things a smart consumer is supposed to do. His surgery was uncomplicated, and he spent only one night in the hospital. The final bill was over $117,000 of which his insurance company paid $70,882, leaving him with a co-pay of $7,088. He contested the charges, ended up in court, and settled for about half the amount. He found his insurance company was not interested in his case, contending they had paid the bill and were done with it. As the article notes:
“You would think that health insurers would make money, in part, by reducing how much they spend. Turns out, insurers don’t have to decrease spending to make money. They just have to accurately predict how much the people they insure will cost. That way they can set premiums to cover costs—adding about 20 percent for their administration and profit.”
Not surprisingly, the patient in this story found his small group premium went up 18.75% the next year, presumably to compensate for the “experience rating” for his surgery the previous year. The article talks about competition, but true competition between large providers is available only in major metropolitan areas such as New York City. In most places there is only one, or maybe two, providers, so choice is not a practical alternative.
Insurance companies can reduce costs by using pressure on small players, typically including physicians. The physician share of the health care dollar has decreased in percentage terms more than 5% over the past 20 years. In a New York Times article, Abelson and Creswell have talked about the impact of this economic squeeze.
“There’s little doubt that the front line of medicine—the traditional family or primary care doctor—has been under siege for years. Long hours and low pay have transformed pediatric or family practices into unattractive options for many aspiring physicians.”
They point out, correctly, that the mega-mergers which have been in the news lately add additional pressure on small practices. On the other hand, representatives of the large corporations justify their actions thusly.
“Frustration with the nation’s health care system has fueled a lot of the recent partnerships. Giant companies are already signaling a desire to tackle complex care for people with a chronic health condition like diabetes or asthma.
‘We’re evolving the retail clinic concept,’ said Dr. Troyen A. Brennan, the chief medical officer for CVS. The company hopes its proposed merger with Aetna will allow it to transform its current clinics, where a nurse practitioner might offer a flu shot, into a place where patients can have their conditions monitored. ‘It requires new and different work by nurse practitioners,’ he said…
Big hospital groups are also eroding primary care practices: they employed 43 percent of the nation’s primary care doctors in 2016, up from 23 percent in 2010. They are also opening up their own urgent care centers, in part to ensure a steady flow of patients to their facilities.”
So medical care may not be just about the money, but the sums of money involved are so large the non-economic aspects may be lost in the shuffle. Unfortunately, many organizational leaders are cynically exploiting their clinicians’ traditional focus on “doing right” by the patient while they make resource allocation decisions designed to meet this quarter’s profit goals. Inevitably, mistakes will be made. Recently I talked with a person who was quitting her job, because she had been called out of town practically every week to help rescue operations where things had gone wrong. She said she was seeing mistakes that she had only read about in textbooks and really did not think could happen anymore given normal levels of training. While she did not elaborate and I did not ask, I suspect someone in her organization had been trying to increase margins and had cut too deeply into staffing and training without recognizing the risk.
Clinicians are not immune from cutting meat instead of fat when trimming budgets, of course, but they are a lot more aware of the costs to their patients. The marginalization of clinicians from decision-making increases the likelihood of catastrophic failure. Yet the economic realities are such I don’t see much change taking place. Given that what doctors and patient want, though, is personalized care, how do we resolve the tension?
I guess I am in one of my cynical phases. Competition in health care is a chimera, but “Medicare for all” does not hold much appeal, either, as it will entail endless rounds of mindless bureaucratic game playing. Playing “money-ball,” though, is a losing game that neither physicians nor patients can afford. I suspect what we are experiencing is the collapse of the old system. Predicting what will come is perilous, but I suspect we will end up with some variation of national health care. It will happen when voters tell politicians in no uncertain terms that they are literally dying for change.
28 May 2018
 Why Your Health Insurer Doesn’t Care About Your Big Bills. 25 May 2018. Accessed at https://www.npr.org/sections/health-shots/2018/05/25/613685732/why-your-health-insurer-doesnt-care-about-your-big-bills.
 Abelson R, Creswell. The Disappearing Doctor: How Mega-Mergers Are Changing the Business of Medical Care. New York Times, 7 April 2018. Accessed at https://nyti.ms/2EsPZn4.
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