As other have pointed out repeatedly, our healthcare system is badly broken. In fact, we don’t have a healthcare system in this country – it’s a series of independent businesses, often competing with each other in the goal of making more profit. The three constituencies in the healthcare business are the customers (patients), the providers (doctors and hospitals), and the payers (health plans, employers and the government). These three groups all have perfectly misaligned incentives. Patients want care at minimal cost, providers make more money by providing more care (whether it is needed or not), and payers want to minimize payments. The payment mechanism drives more care at higher cost, and the result is the U.S. pays 18% of its GDP for healthcare – more than twice as much as any other country on the planet.
How does smarter use of data help this picture? In my opinion, more intelligent use of data is an important part of the answer. Data is a powerful tool to help physicians make better decisions. In the hospital setting, physicians should have access to ALL of a patient’s medical record, not just information gathered during a single hospital stay. In most Emergency Departments, doctors often don’t have unfettered access to outpatient medical records that may provide important clues to making correct diagnoses. Tests are needlessly repeated, incorrect medications are given and diagnostic errors are made all too often. Electronic medical records (EMRs) should be helping this problem, but unfortunately most EMRs are simply digitized versions of the old paper record. We need EMRs to be longitudinal electronic health records, aggregating all of a person’s health information into a single record to be used by all providers of care. A unified health record then needs analytic tools to be able to use the comprehensive record to improve care, provide guidelines for evidence-based medical care, prevent incorrect medication use, stop dosing errors, and have prompts in the analytic tool to stop repeat tests and x-rays- in sum, improve the care.
A unified, single, health record for a patient would be a great tool to help improve care, but in the U.S., we have more fundamental problems than a lack of accessible data. In today’s residency training programs, physicians should be taught how to use the data and EMRs to make better decisions. An evaluation of a patient should always start with the physician sitting with the patient, taking a probing history by knowing what questions to ask, and how to elicit symptoms. This information is supplemented by knowing how to properly examine a patient and understand how to put all the information together to formulate a diagnosis. We cannot rely on an EMR or CT scans to do this job – it must start with a thorough history and a proper physical. One of the most impactful lessons I was taught in residency was that if I finished taking a patient’s medical history and yet still didn’t have a series of probable diagnoses to consider, I needed to take more history. Unfortunately, in today’s hospitals, finding a diagnosis is all too often done by ordering more testing, and in a fee-for-service payment environment, more testing means more revenue. More procedures mean more revenue. Hospitals and physicians should be paid for providing a higher level of quality, not by volume.
I am a strong advocate of using medical data and providing better analytic tools to help physicians and patients, but tools are just tools. Physicians and other caregivers need these tools to improve care, but providers of care also need to listen to patients, think critically in making diagnostic assessments, care passionately about improving care, and use sound judgment at all times. They cannot be effective in a fee-for-service world. Providers do need to improve the care they provide, but the U.S. needs a sound healthcare strategy to solve our issues. Technology is part of that solution.
Michael L. Taylor, MD, FACP
Chief Medical Officer
I welcome the recent announcement from Centers for Medicare & Medicaid Services (CMS) that it is publicly releasing extensive data detailing how much Medicare part B pays physicians for more than 6000 services and procedures. I don’t share the American Medical Association’s position that this data release will be harmful. Medicare part B pays in excess of $77 billion annually for physician services, and the public should be able to see how those dollars are spent.
Truven Health research proves there is tremendous variation in price for hospital services and procedures, and I fully expect these new data will show the same level of price variation. I expect to see considerable variation in price for physician services (office visits, consultations, etc.), but I suspect the real story will be in the prices charged for procedures rather than just the physician services.
Over the past months, several Truven Health articles and studies have highlighted the huge variation in prices for colonoscopies, a recommended screening test, ranging from several hundred dollars to thousands. The public has a right to see these prices before agreeing to the tests. That is the goal of the Truven Health Treatment Cost Calculator. Patients using this tool can see the actual charge for a given test in his or her community, compare costs and then make an informed decision. Our fee-for-service payment system drives wasteful spending on medical procedures, and full transparency is one way to better understand what is driving these high costs.
- How much price variation is present for frequently performed services like EKGs and blood tests? I recently received a bill for a “Metabolic Panel Comprehensive.” The test costs pennies to run—and the bill was $145! In total, my lab bill was $1035.
- Many physicians have invested in office testing equipment and can charge a wide range of prices for these tests. Bone densitometry equipment a good example: it’s marketed with a definite business plan. Doctors are told how many tests they need to do every month to pay for the equipment and guarantee a certain profit level.
Michael L. Taylor, MD, FACP
Chief Medical Officer
Finally, physicians come to the forefront as the connecting link that will help hospitals address and improve financial targets in the next three years. Physician-hospital alignment tops the list in the latest HealthLeaders Media industry survey, "Forging Healthcare's New Financial Foundation," and it’s noted as the most important area of focus and improvement, followed by cost reduction and care model direction. These three areas are key as we navigate from volume-based care (or fee-for-service) to value-based care. Physicians have significant influence on quality and the process of care improvement, since they are the delivery agents. Many definitions of quality exist, but every physician and hospital is constantly evaluated on quality by organizations such as the Centers for Medicare & Medicaid Services (CMS), in addition to independent rankings such as the Truven Health 100 Top Hospitals® study.
First, it’s crucial to make sure there are enough physicians. Current Truven Health data shows differences in productivity by age cohort, and findings show that a retiring physician may need to be replaced by more than one new physician to see the same number of patients. Second, it’s essential to have enough physicians in the right structure.
In the organized structure, there needs to be the right performance-based contract and compensation in place to ensure alignment. Part of this structure includes having the physician leadership at every level in the organization. This includes medical directors, department chiefs, and C-suite physician executive leadership. Third, make sure that physician leadership is selected, trained, and resourced to make the leadership decisions for value-based care. Knowing the practice variation amongst the group and the group variation versus benchmarks helps us understand the drivers of each group and practice to implement changes to better support the practice and reduce variation. The key to this is having health analytic tools to extract the data to measure and compare. As Walter Deming once said, “You can’t manage what you can’t measure.”
Byron C. Scott, MD, MBA, FACPE
Medical Director, National Clinical Medical Leader
A recent commentary notes the shifting of doctors from self-employment to being employed by a heath system. Fully 60% of pediatricians and family medicine physicians are now employed, with 50% of surgeons employed. The number is expected to rise to nearly 75% over the next several years. What is driving that trend? There are at least three compelling answers: debt level, work-life balance, and the hospital’s need to develop market share and control referral patterns.
A recent report states the average medical school student graduates with a debt of nearly $280,000. In 1978, the average debt was $13,000. The student may also have debt obligations from college. Newly trained physicians with that staggering level of debt often don’t want to incur more debt by starting a private practice. The average annual salary of a family medicine provider is $224,000, but for newly trained physicians in private practice, initial revenues are much lower, and it may take several years to get to the average level. Add a home and car mortgage, as well as other personal expenses, and it becomes clear why it’s becoming impossible to absorb the start up costs of a medical practice, which often run as high as $100,000 for a solo practice. By working for a hospital or health system, physicians can avoid all the office costs and the professional liability insurance, while knowing they have a guaranteed salary.
I believe a strong second reason physicians are choosing employment rather than independent practice relates to the difference in lifestyle and work life balance. Most newly trained physicians were born after 1980, and the prospect of managing an outpatient practice and hospitalized patients 24/7 is just not appealing for many of these younger physicians. Working as an employee in a healthcare system that provides a guaranteed salary, utilizes hospitalists, and covers all practice-related expenses is too compelling to turn down. Young physicians also find having personal time off from work very important.
A third reason is the changing market itself. As the country moves away from a fee-for-service payment model to a value-based system, hospitals are moving into risk contracting or capitated payments. The best strategy for hospitals and health systems is to exert more control over the markets in which they serve. By employing physicians, hospitals can transfer office-based services into their own outpatient labs and radiology suites. Hospitals with employed physicians can more effectively direct patient admission choices. As Accountable Care Organizations (ACOs) mature, they will assume financial responsibility across the entire care continuum, from outpatient services to admissions, rehabilitation and long-term care. ACOs will drive the need for more efficient care with less wasteful spending. Hospitals can drive that efficiency with smart IT investments, treatment guidelines and care coordination. This can be done without employing physicians, but it’s more efficient to employ physicians and have them be a part of the process. To fully support care, a newer trend is for hospitals to employ specialists in addition to primary care physicians.
One potential advantage of employing physicians is the opportunity to reduce the variation in medical care that is rampant in the U.S. today. Reducing variation should improve the quality of care and reduce costs by avoiding wasteful and unneeded treatments that may be costing the U.S. up to 30% of the total medical spend. Aligning physicians and hospitals to the triple aim – better care for individuals, better care for the population, and slowing medical inflation is best accomplished in an organized approach – and individually owned practices are less likely to deliver on that promise.
Michael L. Taylor, MD, FACP
Chief Medical Officer
I read about the new bipartisan bill for the “doc-fix” with great anticipation. This bill is a solution to the sustainable growth rate (SGR) problem. The idea of the SGR was to put a limit on annual payment increases for physician services for Medicare patients. The SGR is generally acknowledged to be flawed, because it places arbitrary caps on spending without properly accounting for increases in the volume of services. Centers for Medicare and Medicaid Services (CMS) has experienced payment overruns in every year since it was enacted, and Congress, rather than enforcing the provisions of the bill, made a temporary adjustment, thereby worsening the overrun for the next year. By 2014, to maintain the SGR, CMS would need to decrease physician payments by 24 percent!
The new bill addresses this problem by replacing the SGR; instead, physicians will now see a 0.5 percent increase in payment annually for the next five years. It also incentivizes quality improvement in medical care by encouraging development of alternative payment models. Physicians may receive a 5% “bonus” payment, if at least 25% of their revenue is derived from a patient centered medical home arrangement by 2018. CMS is attempting to change from a fee-for-service payment model (the more services a physician provides, the higher the payment) to a model based on quality outcomes.
I applaud this effort, but there is significant work to be done in switching from a volume-based payment model to a quality-of-outcome model. The most basic (and difficult) challenge is defining which quality metrics to incentivize. The plan is to use the Physician Quality Reporting System or PQRS, (CMS loves acronyms!). As I reviewed the more than 300 quality metrics, it struck me that most measures were process measures, such as:
These are good metrics, but do they actually reflect the quality of care delivered? Physicians have long resisted being measured on quality, because they don’t trust the data. They generally feel the metrics represent just a small part of their practices and many of the metrics focus on primary care. There is less focus on specialty and surgical care metrics, and these areas comprise the bulk of the medical spend. Metrics that look at the patient experience, such as how well the patient fared, are available, but minimally represented in the PQRS metrics. Important outcome measures need to be included, such as what percent of those with diabetes achieved all recommended BP, LDL cholesterol, and A1c goals, not just what percent received recommended care.
- Testing appropriately or prescribing certain medications when treating diabetes patients
- Giving aspirin to heart attack patients in a timely manner
- Offering the right treatment advice for back pain
Metrics are necessarily patient-based, but as new deliver models emerge, new metrics need to be utilized. The Affordable Care Act incentivizes health systems to focus on treating entire populations, not individuals, and helps pay for the IT infrastructure needed to manage and measure the health of a population. We need to use metrics focused on entire populations, not just on patients who happen to see their doctors.
Physicians will accept the metrics, if they have a role in determining, by specialty, which metrics best reflect high-quality care, and which metrics reflect appropriate care. This means measuring wasteful treatments and procedures.
I am a strong advocate of eliminating fee-for-service medicine. In my opinion, this payment model is a root cause for many of the problems in U.S. healthcare delivery. I applaud the effort to incentivize and measure value in health care, not volume. Developing and implementing a strong and accurate system of quality measures will be a giant step in the right direction.
Michael L. Taylor, MD, FACP
Chief Medical Officer