Integrating doctors and hospitals may worsen cost control in health reform

Health reformers propose the proliferation of integrated health systems, like the Mayo Clinic or Kaiser Permanente, which, according to the Dartmouth Atlas, lead to better patient care and improved cost control.

To that end, Accountable Care Organizations have been a major part of health reform, changing the way health care is delivered.

Never mind that patients may not be receptive to the new model, but the creation of these large, integrated physician-hospital entities that progressive policy experts espouse comes with repercussions.

Monopoly power.

To prepare for the new model of health care delivery, physician practices have been consolidating.  In many cases, they’re being bought by hospitals.  Last year, I wrote how this is leading to the death of the private practice physician.

But with consolidation comes a tilt in market power.  Health insurers, desperate to control costs, are finding it more difficult to negotiate with hospital-physician practices that dominate a market.  And patients are going to side with the hospital — insurers that leave out popular doctors and medical facilities face a backlash from patients.  Witness the power that Partners Healthcare has in the Boston market that’s mostly driven by patient demand for big-reputation, high-cost Massachusetts General Hospital and Brigham and Women’s Hospital.

Merrill Goozner notes how consolidation in California actually raised prices:

A national study conducted for the Robert Wood Johnson Foundation found that after the merger wave between 1990 and 2003, 90 percent of large metropolitan area hospitals wielded excessive market power as defined by the Federal Trade Commission. The study suggested the mergers raised prices by anywhere from 5 to 40 percent (depending on how close the merged facilities were to each other) and probably led to lower quality.

The fear now is that “ACOs could make an existing problem marginally worse,” said Robert Berenson, a senior fellow at the Urban Institute, who conducted the California survey. “The issue is market power.”

Progressives face a conundrum.  They want doctors to practice in integrated health systems so that economies of scale can lead to better health IT integration, cost control, and better quality — or so says the Dartmouth Atlas data.

But in doing so, they’re promoting monopolies, where medical providers and hospitals can then dictate prices and have a greater say in health care pricing.  That is antithetical to progressive health policy dogma.

So, ironically, it may be because of health reformers’ zeal to integrate doctors and hospitals that may be the biggest impediment to cost control going forward.

 is an internal medicine physician and on the Board of Contributors at USA Today.  He is founder and editor of KevinMD.com, also on FacebookTwitterGoogle+, and LinkedIn.

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  • stitch

    In Baltimore, we already have several competing organizations, the big one being Hopkins, but also the University of Maryland system and Medstar, which comprises 4 hospitals, and Lifebridge, which includes 2. What this has led to in this town is not cost containment but competition among these groups to provide more services and entice a generally medically savvy group of patients to their facilities. We don’t have the monopoly issue, and of course Maryland is unique in being a non-DRG state, but the drive for increased outpatient and elective services is significant.

  • http://www.healthbeatblog.org maggiemahar

    Kevin–.

    Under heatlh care reform, most people in the insurance industry agree that there will be a “shake-out”– many insurers just won’t be able to return the profit shareholders expect. The fact that they can’t “cherry-pick” combined with the rule that when covering large groups, they can keep only 15 of premiums to cover their own costs and profits, paying out 85% (80% when covering smal groups) will be too much

    In addition, insurers who, in the past, made their money selling high-deductible “Swiss cheese” plans (filled with holes) also will be out of business.

    Only large insurers (who enjoy efficiences of scale) are likely to survive. They will gobble up some of the smaller compapnies, and we’ll be left with many fewer large insurers.
    Meanwhile, if ACOs are successful, health care providers also will be consolidating.

    Under reform, large insurers won’t be able to pay the fees that Partners has been demanding for relatively simple
    procedures– in most states, state regulators are going to
    be making it much harder for insurers to pass on excess charges in the form of higher premiiums. I suspect that states will begin investigating hospitals that over charge.

    It’s possible that some states will go back to the Maryland model which requires that all insurers, private and public,pay hospitals the same fees for the same services (with adjustments made for hospitals that see a sicker , poorer population, or are teaching hospitals.) In Maryland, this has worked out quite well.

    Meanwhile, under reform, Medicare will be much tougher about refusing to pay for unncessary or overpriced care. The Secetary of HHS will have the power to lower fees for “overvalued services” whiie raising fees for “undervalued serevices”.
    This suggests that physicians fees will be cut in some areas where charges are high and benefits are not great,and raised in other areas. Net, net, Medicare will be saving money.
    Meanwhile, if Medicare inflation continues, the Independent Payment Advisory Board will have the power to recommend cuts in Medicare spending.–as long as it isn’t cutting benefits or raising co-papys or deductibles. .Its recommendationswil automatically become law unless Congress can find ways to save an equal amount of money–without shifting costs to seniors or cutting benefits.–within a relatively short period of time. It’s unlilkely that Congress will try to do this: any cuts will be extremely unpopular with some group,and Congressmen don’t want to take the heat.
    Drug-makers are very worried that the IPAB will recommend paying less for certain drugs –or paying for them only if patients fit a particular medical profiile.
    Private insurers have said that if Medicare gets tougher and provide political cover they will follow suit– already private insurers are paying less for some diagnostic testing ..
    Bottom-line: we’ll wind up in a world where both large private sector insurers and Medicare are rewarding doctors and hospitals for value (providing better care for less) whille penalizing them for inefficiency, overtreatment and attempting to over-charge.
    At the same time, large provider systems will have their own market power- as you say, patients will want them in their insurers’ network.
    Monopoly power is not necessarily bad if it is balanced.–and if insurers are regulated. The 85/15 rule is a good one, and the govt’ was quite tough in deciding what counts as part of the 85%. The fact that all insurers will have to provide “essential benefits” also is crucial This will make it very difficult to refuse to cover something just because it is very expensive..
    Finally “consolidation” is not, in and of itself, a bad thing. Our health care system is too fragmented, and this adds to the costs and waste.
    We need more collaboration (not more competition which causes hospitals to over-spend on cutting edge equipment, rather than sharing it.) .
    One reason care is less costly in other countries is because their health care systems tend to be less fragmented.
    And we know, from experience, that large integrated systems that have moved away from fee-for-service and empahsize collaboration between doctors and hospitals –and among doctors –proivde better care for less.
    This doesn’t mean that they always WILL the medical culture also plays a role. But I suspect that the model will spread in the upper mid-west, the nortth west,the West Coast , parts of the Southwest and upper New Engand
    The East Coast– from Boston to D.C.l, and Florida–will be the last place to see reform. The medical culture here will be very reluctant to change.
    Finally, some physicians say that if Medicare cuts fees in some partiuclarly lucrative areas, they just won’t take Medicare patients. But I can’t think of a hospital that could stay open without Medicare. And if doctors and hosptials are going to be collarborating, phsyicians will wind up seeing Medicare patients too. The idea that doctors will be able to “balance bill”– charging the patient the extra amount that Medicare isn’t paying ignores the fact that half of all seniors are living on less than $20,000a year (total income from all sources) and have relatively little in savings. Even middle-class seniors can’t afforfd “balance billing” and others would resent it.
    No doubt some doctors will set up concierge practices, (espeically in certain parts of the country), but they will be the minority.
    Overall, the gaps between doctors incomes are likely to shrink with those at the bottom of the ladder earning more than they do today, and those in the most lucrative specialities earning somewhat less. This will happen over time.

    • Kevin

      Maggie,
      Thanks for your thoughtful reply.

      It appears that physicians and hospitals are consolidating at a much quicker rate than insurers are. So, in the short run at least, there appears to be the potential for provider conglomerates to drive prices up.

      But long-term, once the insurance industry consolidates, these provider groups will be negotiating against both larger insurer entities and Medicare, at which point the cost savings should be realized.

      It’s a slow process, but I see the consolidation favoring doctors and hospitals for at least the next few years.

      Kevin

    • Joe

      Maggie writes: “Meanwhile, under reform, Medicare will be much tougher about refusing to pay for unnecessary or overpriced care. The Secretary of HHS will have the power to lower fees for “overvalued services” while raising fees for “undervalued services”.

      Joe Says: This I see as the problem with the current cost containment concept. I wonder how many of us have faith in the Secy of HHS to solve the problem created by monopolistic or dualopolistic provider/payers. Certainly the Secy of HHS will change every few years and be effectively replaced by bureaucrats who have a conflict if they want to eventually be employed by the organizations they regulate. Should the bureaucrat deny an increase, don’t you think the leagues of lawyers of the big organization will have a field day? Which will be cheaper (and easier and less damaging to the bureaucrats), the legal costs of fighting a denial or approving the increase?

      It simply won’t work to have human nature stand in the way of the natural business evolution and where market position and power allows for higher and higher rates. We see astounding compromises whereby humans have chosen to do some pretty ethically questionable things in pharma, hospitals, and insurance and all over healthcare, just to make a buck, feed their kids etc. We are asking too much of the individual to stand in the way of the industry in which they work. We provide far too little cover and support for any whistleblowers even.

      I agree with some of what I see in Kevin’s post that larger and larger players, especially those that dominate geographic markets, will drive cost up not down. It is natural, it is expected of them, and thinking that a few good people will stop it is just not believable.

      I can’t see anything in Maggie’s writing above that will change the basic truth. Since when has Medicare to date “refused to pay for overpriced care”?

      In fact I think big dominant providers or payers in any geographic market MUST be broken up or the whole system socialized.

    • doc99

      “Monopoly power is not necessarily bad if it is balanced.”

      Res ipsa loquitur.

  • pcp

    “it may be because of health reformers’ zeal to integrate doctors and hospitals that may be the biggest impediment to cost control going forward”

    Talk about not seeing the obvious!

  • jsmith

    An HMO by any other name still stinks as badly.

  • http://www.neurokc.com Vernon Rowe

    With all due respect to Kevin and Maggie, amen to jsmith and pcp.

    Hospitals now gobble up 50% of the healthcare dollar; insurance companies, 25%; doctors, 9.5%; drugs, 12%; long term care, 8%; outpatient MRI, <0.5%.

    Most care is delivered in an outpatient setting, and is vastly more expensive when delivered by hospital owned facilities, particularly, but not only, under monopolistic conditions. Surely everyone knows that.

    Hospitals spent over $900 billion on building programs last year, and they're just getting warmed up.

    Insurers will suffer little under reform. Their Medical Loss ratio, or what they have to pay out divided by what they take in as premiums (95% in the mid '90's and 80% today) will be balanced by the premiums of new clients under "reform."

    So–more hospital-physician consolidation is bound to lead to markedly increased costs to the system. Hospitals and insurers, any way you cut it, are the chief beneficiaries of the "reform" that awaits us.

    Arguing about the details is truly like dusting the hearth when the house is on fire.

  • http://www.healthbeatblog.org maggiemahar

    Kevin–

    Thank you.

    It is hard to say how quicklly consolidation will happen in the insurance industry.. But the 85/15 rule goes into effect this year, and Weiss Ratings (the one indpendent group that rates health insurers) http://www.weissratings.com/news-releases/general-2010-07-22.html
    predicts that smaller insurers will be going out of business beginning this year. (Close to half of the insurers they rate in terms of financial health already are getting a “C” to “D” rating._

    Weiss lists just 16 large insurers who get ratings ranging from “A” to “B”,. And based on what I know, I can see four of those 16 getting out of the business (HealthNet, Anthem, HighMark and perhaps one or more Blues.)

    Eveything turns on how they made their money in the past. If they did it by selling stripped- down insurance, they are in trouble.

    S&P also predicts that “mid-tier players” will be knocked out of the businesss, starting this year.

    Because so many people think that insuers got a “sweet deal” from the administration–and don’t understand how insurers make money– they don’t realize how tough the new rules are.

  • inchoate but earnest

    Dr Pho,

    Could it be that you and most of your professional colleagues imagine the “ring” within which you “compete” much, much more provincially than most other 21st century providers of valuable, high-touch services envision theirs?

    Let’s assume so for the moment. Now, what happens when these provincial monopolies you foretell discover that they will indeed find themselves competing for patients, on the basis of their ability to deliver measurably superior care?

    Let’s just say it will not be “progressives” who will face a “conundrum”.

    • Kevin

      With 32+ million newly insured patients patients and soon to be Medicare-eligible Baby Boomers entering a health system that’s already beset by a critical primary care shortage, I do not anticipate physicians facing a patient shortage.

      Of course, I don’t have a crystal ball, and time will tell which scenario is correct.

      Kevin

      • inchoate but earnest

        Dr Pho, you’ve profoundly missed the point, much as elmo, pcp, vernon, et al manage to do, again and again.

        There is no doubt you are all superb clinicians, in your way – but your way is broken.

        Those geography-bound ‘monopolies’ as you style them, will of necessity need to find a way to ‘care farther’. And some will. We don’t need all of them to do so.

  • Marc Gorayeb, MD

    It’s really cute how academics purport to know these complex systems well enough to make some of the pronouncements on display in this thread. “Monopoly power is not necessarily bad if it is balanced.–and if insurers are regulated.”
    It’s so hard to control an industry when there are so many entities at so many levels, isn’t it? So why don’t we just force everyone into regional monopolies, crushing all possible competition on price or service. Then we’ll just regulate the few who remain standing. So simple. Never mind the free market, where the actual recipients of service – the patients – have some skin in the game and are allowed to make individual rational economic decisions. Capitalism is so yesterday.

    • jsmith

      Bingo. This a complex system, where unanticipated consequences, quite possibly horrendous ones, are easily anticipated by those with experience. The idea that, if we just follow the plan, everything will be OK is risible to you and me and to most of the docs here. We have learned to spot the blockheads with megaphones, in our own field at least, but the great American public is naturally confused.
      Anecdote: I was talking with a friend about EHRs last Sunday. He is a professor of genetics, a very smart guy, but he had assumed that EHRs were bound to improve care and decrease costs, because he had heard the talk and glanced at some of the articles and had assumed that they wouldn’t print it if it were not true.
      ACOs are yet another uncontrolled experiment. Next case.

  • ninguem

    A factoid I’ve heard is that primary care physicians require 4.5 employees per doctor, according to organizations that keep track of such things (MGMA).

    Their data comes from the big box mega-clinics run by hospitals and other large entities.

    Any solo or small-group primary care docs here? Do you have 4.5 employees?

    The way it’s been explained to me, the organizations keeping track of such statistics, don’t really look at the small fish, they just look at the big places and extrapolate down. They assume solo and small-group docs are as inefficient as the large places.

    • pcp

      “Their data comes from the big box mega-clinics run by hospitals and other large entities.”

      That’s why we have facility fees, which essentially double the price of out-patient care when delivered at a hospital-affiliated facility.

  • ninguem

    Indeed.

    I worked part-time as a hospital-affiliated Urgent Care. It was a freestanding clinic, miles away from the hospital.

    They used whatever administrative magic they use to get their facility designated part of the hospital. They were no different from my private office, except for X-ray. They had X-ray, I didn’t. Reflecting hospital politics, they were not allowed to do a lot of CLIA-waived stuff they should have been doing. So they had X-ray, my private office did not. I had a fairly well-stocked CLIA-waived lab, their lab was primitive. Otherwise, not that much different, except for a lot of wasted space, and lots of midlevel administrators.

    As a hospital-related facility, yes they sure did get those facility fees.

    So someone gets a laceration on vacation out of state. It’s sutured elsewhere. Now they want the sutures out, they showed up at an Urgent Care.

    The receptionist felt sorry for them, so made sure they knew, the fee was going to be about $300 for the suture removal. Receptionist knew that, because of many patient complaints over time about massive bills for small procedures.

    I had many a patient walk in the door, any after a couple hours seeing patients, I ask what happened to so-and-so with the blue jacket or red hair that walked in. I never saw the person.

    Receptionist gave the person a heads-up on the potential fee, and they walked out.

  • pcp

    Someone’s got to pay for all those fountains in the main lobby.

    Has anyone explained to patients, Medicare or otherwise, that it will wind up costing them an arm and a leg if they dare attempt to get care outside of the ACO with which they’ve registered?

    • jsmith

      Yep, fountains in the lobby. Our 25 bed hospital has a grand piano next to the OB “suites.” Yet they’re piggybacking their computerized physician order entry system onto Meditech, a system using the latest Commodore 64 technology.

  • imdoc

    Anyone old enough to remember the phone companies of the 1970′s knows what regulated monopolies look like. You had a choice of four corded phones and paid rental on it to the phone company. More for the newfangled touch-tone. Sometimes calling across the street was long distance if it was another area code. Yeah, that was innovative.

    • ninguem

      Indeed. It’s my obsession, I guess, but that’s the idea with things like HSA’s.

      Patients themselves might want to consider whether they want to pay for that fountain when it’s their money.

  • http://drpauldorio.com Paul Dorio

    Great comments. Great post, Kevin. What more people need to understand and acknowledge is:

    More regulation does not lead to lower costs.

    To think otherwise is folly. My hope is that there will come a day of conformity to appropriateness criteria, which decreases over-utilization if instituted; self-referral legislation; medical liability reform; and perhaps even insurance reform. With those goals in mind, costs might actually decrease. Until then, it’s all just more regulation and oversight, requiring single physicians to employ at least 4.5 workers just to take care of the paperwork.

    • pcp

      I don’t think the ACO problems identified here can be considered “more regulation.” I think many of us see it as continued and progressive exemption of insurers and hospital corporations from century-old anti-trust laws that are still vigorously enforced against doctors.

      • http://drpauldorio.com Paul Dorio

        As you will, but the truth of the matter is that insurers, hospitals and government entities have “the power,” while we physicians and our patients do not. I find that fact unsatisfactory and untenable.

    • jsmith

      Not quite right, Paul. Better to say that more regulation does not necessarily lead to lower costs. It depends on the details of the system in question. Utilities, which are natural monopolies, are heavily regulated. And overall probably a good thing for consumers, but not without its downsides, of course (lack of incentives for modernization of plant and equipment would be one).
      But you’re right that this particular regulation or proposal or whatever might be akin to foot self-shooting.

  • http://www.healthbeatblog.org maggiemahar

    Joe, Vernon, j smith and j smith your most recent comment
    Joe– In the past Medicare hasn’t refused to pay for overpriced care because any change in what Medicare covered had to be approved by the Senate–and there were always lobbyists whose income stream would be cut if Medicare paid less.
    Under the ACA the HUGE differerce is that both the Secretary of HHS and IPAB can recommend cuts that become law without going through Congress. IIPAB will work like the board that closed military bases: few if any woudl have been closed if the recommendation had to go through Congress.
    In a great money countries, government regulates what
    treatments are covered and how much government is willing to pay for them.

    Vernon–
    Under reform Medicare wil be paying providers extra to keep patients out of hospitals (medical homes).
    Secondly, the bill makes a huge investmenti in community clinics (increasing capacity by 50%), and in many cases, these clinics will replace ERs and outpatient facilities as the places where paitnets receive care. (Already very successful in NY as well as other places.)
    As for whether insuers will suffer under reform: Wall
    Street understands the effects of teh 85/15 (or 80/20) rule far better than most.
    S&P recently predicted that “mid-tier”i health insuers will be knocked out of the game.
    And not long ago Weiss Ratings ( the one independent agency that rates the financial health of insuerrs) predict smaller health insures going out of business beginning this year (whe the 85/15 rule kicks in)
    . Close to half of the insurers they rate in terms of financial health already are getting a “C” to “D” rating. Many are close to going under–even without health care reform.
    Weiss lists just 16 large insurers who get ratings ranging from “A” to “B”, and based on what I know, I can see four of those 16 getting out of the business (HealthNet, Anthem, HighMark and perhaps one or more Bues.) Eveything turns on how they made their money in the past. If they did it by selling stripped- down insurance, they are in trouble. (Those policies will no longer be allowed.)
    Because so many people think that insuers got a “sweet deal” from the administration–and don’t really understand how insurers make money– they don’t realize how tough the new rules are.. S&P and Weiss do.
    The notion that millions of new customers wil bring great profits to insurers ignores the fact that a great many of those cusomters will need quite a bit of medical care. Many have been uninsured for a long time, and they have deferred care.
    In some caess, insurers will have a hard time keeping 15% of premiums after they pay out reimbursements for this care. . (They also won’t be able to deny care because it is too expensive. They will have to cover everything in the “essential benefits list” and the legislaiton suggsts that “everything” will be quite generous. )
    Insurance industry insiders will also thell you that there is a “major shakeout” coming which will leave realtively few companies still standing.

    jsmith– I agree about EHRs– we’re rishing into HIT far too quickly,with too little knowledge. I just wrote a post about this on http://www.healthbeatblog.org.
    As for the rest of reform,it will all need revision as we go along and see waht works,what doesn’t, and what creates unintedned consequences. Refoorm is a process, not an event, and it will unfold, with many changes,over many years. The reformers. (Don Berwick, director of CMS, the folks at HHS, etc. all undestand this.
    People who rely on the mainsream press for their information about reform will inevitably wind up with a simplistic notion of what it’s all about.
    Read the legislation. Or read some of the articles in
    Health Affairs.
    On whether regulation can keep a lid on prices.
    The example of utiities is a good one. We regulate them because heat and light are necessities, like health care.
    For that reason, we cannot let them get too expensive.
    When we deregulated utilities, we got Enron–which left
    California to freeze in the dark.
    In every other developed country int he world, health care is, to some degree, regulated. The U.S. is the only country which has chosen to turn it into a largely unregulated laissez-faire mareket. This is why health care costs so much more than in any other developed country–and by and large, health care here is no better. (There are exceptions, of course.)
    And in some areas (chronic disease management) care in the U.S. is worse.
    The good news is that there is much waste in the system. We can bring down the total cost of care without eliminating any effective care.
    Meanwhile, under reform, primary care doctors, and others who provide preventive care will be paid more.Gertologists and generral surgeons will be paid more. Nurse practioners will be paid more.

    The only physicians who are likely to see their income fall
    are those who do extremely lucrative procedures in large volume. Under reform, Medicare and other insuers will no longer be paying for volume. But if a specilaists achieves good outcomes and provides efficient care that avoids waste, he will be rewarded.
    Probably some specialists at the top ofthe income adder will find that they are “doing less”– fewer operations and procedures. But that also means that they will be under less pressure. Better working condtioins. More time to talk to and listen to patients (for which they willl be compensated.)
    Compared to physicians in other delvoped countires, U.S. doctors work very long hours. This is because perverse financial incnetives push them to “do more, do more” They, too, may be happier “doing less.”
    Change will be difficult but in the long run, could be a
    win/win for most of us.

    .

    • Joe

      Maggie Writes: “Under the ACA the HUGE differerce is that both the Secretary of HHS and IPAB can recommend cuts that become law without going through Congress. IIPAB will work like the board that closed military bases:”

      Joe Says: I’ve heard that before Maggie, and I don’t believe it will work. What I am saying is that the operative words from the above, “can” and “will” are magical thinking that will simply never happen. The people you are depending on are imperfect, have a conflict of interest, are too busy doing other things and exist within a bigger system that has the clout to bend the rules or change the rules in some future congressional session.

      I wish you were right about how the world works, but sadly I see it as impossibly naive. There is simply no sustained success in government history that supports your assertions.

    • elmo

      “Compared to physicians in other developed countires, U.S. doctors work very long hours. This is because perverse financial incnetives push them to “do more, do more” They, too, may be happier “doing less”

      Sorry Maggie but that is generalization spoken by someone who doesn’t actually work in this business. The fact is I work longer and longer hours seeing more patients because there is no one else to do it. IF it were about the money I would have left medicine long ago. I also work in a field were people HAVE to be seen quickly when they are referred to me. Lastly I work in a state (NY) in which frankly the powerbrokers don’t give a damn what happens outside of the greater NYC area. Hence outside of NYC fewer doctors doing more with less. Again, you really need to spend some real time outside of manhattan.

  • http://www.neurokc.com Vernon Rowe

    Great thread. Contributions are by those who practice medicine, and those who don’t, and the divergence of opinions is striking along those lines.
    1) I have seen no compelling arguments how centralization of decision making is going to improve healthcare while reducing costs. I believe costs will be drastically escalated, “medical homes” or no. No specifics (and the bill has precious few) contradict this trend.
    2) Utilities are a poor analogy for medical care, since they are binary events (you either have power or oil, or you do not), and healthcare is anything but a binary event.
    3) Look at the VA hospital system in this country if you want to see where our current course is taking us. It is centralized, with physician employees and government benefits. It is a political football and vastly more sensitive to pressure points than our healthcare system is in general. If you have never visited a VA hospital, or seen a VA outpatient clinic, I suggest you visit one.

    Needless to say, I believe we in the US have the finest healthcare system in the world. People of means come from all over the world to use that system. It got that way through the freedom providers have, to make decisions about what is best for their patients. Patients seem to like it too, and they don’t like the closed panel HMO model, one that the ACA is moving towards.

    Take away the freedom of providers to decide what’s in the best interest of patients, and of patients to decide what is in their own best interests, and there is no decision to be made. When that happens, a patient who picks up the phone to call the doctor’s office will become a participant in a truly global marketplace, asking questions of providers in India, China, or somewhere in southeast Asia who refer to an online manual. This after all is the most cost efficient solution to the “healthcare problem.”

  • http://www.healthbeatblog.org maggiemahar

    Jordan–
    I agree— a very interesting thread.
    On the VA see the book “The Best Care Anywhere” by Philip Longman.Studies from peer-reviewed medical journals show the VA achieving better outcomes than other hospitals in many areas.
    I have visited VAs. (And, as it happens, my brother-in-law gets excellent care from a VA.)
    I
    Joe–
    This has nothing to do with belief or fatih This is the law.
    Congress has already voted that this is the way it will work:
    IPAB must find cuts if Medicare inflation continues and if Congress can’t find equal savings,IPAB’s recommendation become law.
    IPAB wil have the same power as the panel that decided
    base closing. It worked then, it will work now. .

    • elmo

      Maggie:
      The 1997 balanced budget act with the SGR formula and mandated cuts certainly did not have CMS need to obtain congress’ approval before instituting mandates cuts. However congress has by and large stepped into prevent those said cuts. Now I haven’t read the whole bill but I don’t know that this law prevents this same thing from happening again. I guarantee you special interests will come out of the woodwork to have congress do the same exact thing it has with the SGR.

    • Joe

      Um, did base closing drastically reduce the defense budget?

    • doc99

      Remember that PPACA has been declared void in at least 26 states. There’s that pesky constitution thingie again.

  • doc99

    The PPACA is the ultimate in Orwellian Newspeak. The law is neither about Patient Protection nor Affordable Care. Had the law made the provision for 16,000 more doctors, it’d be hailed as a great step forward. Instead, this law provides for the hire of 16000 more IRS agents. This law is all about control. The statists always know what’s good for you.

  • http://www.neurokc.com Vernon Rowe

    Kevin has so many other great posts, but I seem to be stuck on this one, probably because it hits me and the other docs where we live.

    For Inchoate But Earnest
    Yes, you’re right. Your point went right by me. I don’t understand string theory, but from what I have seen, it has little to do with the practice of medicine. So maybe you could restate your point and spell it out for all us simpletons.

    I don’t see how anyone can evaluate and treat a patient without touching them. How in the world are you going to do that long distance? So medicine for me will always be local, telemedicine programs notwithstanding.

    Not only that, but I realize after doing this for awhile that I will always have to make decisions on an incomplete data set. 5% or fewer patients will ever be eligible to be the subjects of Randomized Controlled Trials, and thus generate Class I evidence for treatment, so what about the other 95%?
    Huh?

    Decisions, decisions. I’m sure the Independent Advisory Board will be able to tell me exactly what to do with Aunt Tillie, because that’s what I really want to know.

  • http://www.healthbeatblog.org maggiemahar

    Re the danger that consolidated brand name hospitals will
    be able to charge more ….

    In Massachusetts, big insurers are already striking back..
    (As the Boston Globe had reported in the past, in Mass, large brand-name hospitals have been charging exorbitatnt fees for simple procedures that are done just as well–and for much less, at other hospitals.
    Now BCBS has come up with an insurance plan that will direct patients away from these hospitals:

    “Blue Cross Blue Shield of Massachusetts (Boston) is reporting unprecedented interest in a new health plan that jacks up member copays for procedures at 15 hospitals on its list of “high-cost” facilities.

    “According to a spokeswoman, nearly 30% of BCBS-MA’s small business and individual clients renewing in January 2011 signed up for the Hospital Choice Cost-Share plan. Typically, a new plan option attracts just 1% to 2% of BCBS-MA businesses in the first year. A separate BCBS-MA tiered network product called Blue Options – launched in 2007 – has 95,000 members.

    “HCCS offers average premium savings of about 5% compared to traditional plans. However, member copays in six key areas are far higher. For example, inpatient copays at one HCCS plan are $1500 for high-cost hospitals versus $500 in low-cost hospitals (see chart). Outpatient day surgery copay is $1250 at high-cost facilities versus $250 a low-cost facilities.

    “Among the hospitals on the high-cost list are major academic centers like Brigham and Women’s Hospital”
    .. . .”

    I expect that other large insurers will follow suit.

    • Joe

      An anecdote (at best) or wishful thinking is no proof. Doing something that has no outcome study is at odds with the suggestion of how to contain healthcare spending. In medicine, this would be considered potentially unethical.

      The vast majority of research in healthcare (and other industries) says that monopolies increase cost and stifle change that may endanger the monopoly. That is the predominent outcome to be expected from ACOs.