On Institutional Failure - Part 2


             In the last article, I set out the notion that the failure of Lambuth University did not occur because of a single catastrophic decision, but was the outcome of a series of decisions that were fundamentally static instead of forward looking.[1] I realize I did not say a couple of things I should have. First, the folks making decisions were thoughtful people dedicated to the mission of the organization they served. The failure was not lack of intelligence, but a misreading of a changing reality. Secondly, I should make it clear that when I refer to General Hospital I include physicians as well as administrators and staff.

            So what is going on? How do you perceive your day to day life? Do you see each day as different? Unless something dramatic happens, are you conscious of the passage of time? I am cursed by consciousness of the passage of time and am constantly searching the horizon for threats and opportunities. I suspect it is this personality trait that causes me to advocate the positions I have, even though they are may be viewed as unduly alarmist. Having said this as a kind of warning, let me list some of the trends that have me alarmed about the future of General Hospital.

            The biggest, of course, is the economy. My intuition tells me that we are in the midst of a once in a lifetime resetting of our economy. History tells us that our economy was last reset from 1929-1945, but was reasonably predictable from 1946 to 2007.[2] I would argue that the last four years have shattered many of the assumptions underlying the previous era, and it is likely to be awhile before we arrive at a new, stable set of assumptions that work reasonably well. However, I see nothing to suggest that there is any scenario that will result in pumping “new” money into healthcare.

            What evidence do I have for this? Aren’t the Republicans committed to repeal of Obamacare? Actually they are committed to repeal of the individual mandate, which will result in serious negative impact on the Federal deficit, making the pressure to cut spending even more intense than that associated with the less controversial parts of the Affordable Care Act, as Obamacare is more properly denoted. Consider, that today our hospital is having its payments from Medicare cut 1% to fund “quality improvement.” In order to get the 1% back, the hospital is going to have to outperform the vast majority of hospitals in the country on quality measures and on patient satisfaction, and they are going to use data for care that has already been done. Since we were slow off the mark in looking good, I doubt we will get this money back.

            Starting this month, Medicare is tracking expenditures per beneficiary and attributing these back to the hospital. Starting in FY 2013, Medicare will adjust payment to reward hospitals that are “cost-effective” and penalize those that are not. Like the current payment, the funds will be created by holdbacks on current payments. The current proposal includes charging the hospitals for costs three days before and 90 days after a hospitalization.[3] The rationale for this is to encourage care coordination. Recent research, though, shows that among high-cost beneficiaries, health status was the major driver of cost.[4] 

            Another driver is changing public attitudes. A recent “point-counterpoint” debate in The New York Times emphasized several ways to save money including limiting prostate cancer screening, mammograms, and some hip replacement surgeries as well as “administrators whose job it is to pad the bills.”[5] Another commentator noted that “patient-centered care should focus on services, procedures, or products that improve these beneficiaries quality of life, alleviate their symptoms, and enhance their ability to function to the highest degree possible.” She then goes on to note that a lot of necessary care is not paid for, but a lot of unnecessary care is covered.[6] A third commentator advises “Don’t let the oncologists make all the decisions,”  which is actually a plea to integrate palliative care into oncology practice as a matter of routine.[7] A fourth commentator argues for outsourcing determination of what is effective to the British Health Service.[8] She notes that the British Medical Journal has published assessments on more than 3,000 different treatments and found 51% of unknown effectiveness, 11% as definitely beneficial, 23% as probably beneficial, 7% as a trade-off between benefit and harm, 5% as unlikely to be beneficial, and 3% as likely to be ineffective or harmful. The author proposes Medicare stop paying for the last two groups (9% of all treatments) and stop paying for the 51% of unknown effectiveness after 10 years. The public is skeptical that “more is better” and suspect we may promote treatments for our own ends.

            Now we may or may not agree with the BMJ estimates, but I assure you our policymakers take these as facts. Thus when a physician argues that he “has” to do something for patient benefit, the odds are he is wrong more than half the time. Certainly these odds seem about right for the guidelines published for care of patients with CKD. The number of A level recommendations, those supported by solid data, are usually less than 20%, and the number of C level recommendations, “expert opinion,” are more than 50%. I think we can see a continued emphasis on stopping payment for care that is not at least C level evidence in the near future, and with the payment changes already underway, it behooves us to think about stopping provision of care not supported by at least C level care, even if we use local expert opinion instead of some national body.

So I am back to where I started. The changes I have described are coming and the database is being created now. We are poorly positioned to profit from the changes, and are at high risk for being penalized for our past performance. I also contend we are poorly organized to respond effectively to these changes. Think about it.

Written 4 July 2011, revised 4 May 2014.

           


[1] The lead article in The Jackson Sun for Sunday, 26 June 2011 reached similar conclusions and cited some of the same episodes that I did.

[2] Yes, I remember the stagflation of the 1980’s, the S&L debacle, etc.  Nonetheless, expectations did not undergo any appreciable shift during this time.

[3] Pear, Robert.  Medicare Plan for Payment Irks Hospitals. 30 May 2011.  Located online at the NYTimes.com.

[4] Reschovsky, J. D., et. al.  Following the Money:  Factors Associated with the Cost of Treating High-Cost Medicare Beneficiaries.  HSR.  DOI: 10.1111/j.1475-6773.2011.01242.x.  Accessed 8 June 2011.

[5] Gross, Jane.  What Medicare Services to Cut, Now.  http://www.nytimes.com/roomfordebate/2011/06/01/

[6] Levine, Carol.  Make “Medically Necessary” Less Murky.  Same website as above.

[7] Mahar, Maggie.  Don’t Let Oncologists Make All the Decisions.  Same website as above.

[8] Hanson, Robin.  Outsource Evaluation to the British.  Same website as above.

Further Reading

On Change
Why do people change? A consideration of the desirable future state.

On Failure       
 Failure is inevitable. Successful organizations expect failure even from highly reliable processes. A consideration of how to tolerate failure.

On Strategy
 A central question for healthcare organizations as they face the future is what is our goal?  While taking care of patients might seem the obvious answer, it is the one that is usually not considered.