New Law’s Demands on Doctors Have Many Seeking a Network
By Abby Goodnough
The New York Times, March 2, 2014
Dr. Sven Jonsson, a primary care physician in this rural community, is seeing a steady tide of new patients under President Obama’s health care law, the Affordable Care Act. And so far, it is working out for him. His employer, a big hospital system, provides expensive equipment, takes care of bureaucratic chores and has buffered him from the turmoil of his rapidly changing business.
About 25 miles away in the more affluent suburb of Crestwood, Dr. Tracy Ragland, 46, an independent primary care physician, is more anxious about the future of her small practice. The law is bringing new regulations and payment rates that she says squeeze self-employed doctors. She cherishes the autonomy of private practice and speaks darkly of the rush of independent physicians into hospital networks, which she sees as growing monopolies.
(Dr. Ragland) said that she embraced the goal of extending health coverage to far more Americans, but that Medicaid paid too poorly for her to treat any of the new enrollees. And while she is accepting some of the private plans sold through Kentucky’s new online insurance exchange, she has rejected others — again, because she considers the payment too low.
Dr. Jonsson owned his practice in Louisville for a decade — and did not accept Medicaid, for the same reasons that Dr. Ragland generally does not — but sold it in 2010, months after the Affordable Care Act passed. He did so, he said, expressly out of concern that the law and related requirements were about to ratchet up the pressures and expense of private practice. In particular, he dreaded having to buy and learn how to use an electronic records system, not only because such systems are expensive but because doctors’ productivity slows down while they are learning the computerized systems, threatening tight margins.
Only about 40 percent of family doctors and pediatricians remain independent, according to the American Medical Association — and many, including Dr. Ragland, feel that harsh economic winds that were already pushing against them have been accelerated by the Affordable Care Act.
Dr. Jonsson is less mired in the daily worries of running a medical business. His hospital system (Baptist Health), with far more bargaining power than a private practice, negotiates with insurers on his behalf, pays his overhead and malpractice insurance, and handles much of the ever-expanding paperwork. It provides him with an X-ray machine and a costly system for keeping digital patient records, a move encouraged by the new law. He has been able to take his first long vacations in years, including a recent month in his native South Africa.
Since the passage of the act in 2010, hospital systems have been acquiring physician practices to shore up their market positions and form networks to take advantage of incentives under the new law. For now, Baptist is taking a financial hit by putting so many doctors on staff: Moody’s Investors Service downgraded its credit rating in September, citing “increased losses from an aggressive and rapid physician employment strategy.”
Baptist enlisted about a dozen of its primary care providers in the Louisville region to take on new Medicaid patients, officials there said, both to get more paying customers in the door and, as a nonprofit system with a stated charitable mission, to help more of Kentucky’s poor get medical care under the law.
The primary care practices of Dr. Sven Jonsson and Dr. Tracy Ragland described in this article are not merely anecdotal. They are truly representative of major changes taking place in the financing of primary care today. Is this change a disruptive innovation that will deliver on the promise of an expanded primary care infrastructure with higher quality and lower costs? Let’s take a closer look.
How disruptive is this? Both Dr. Jonsson and Dr. Ragland practice in free standing clinics with only a few associates. They see similar patients with acute and chronic care needs. Previously they both felt that they could not afford to accept Medicaid patients because of the very low payment rates under their state Medicaid program. Since becoming employed by Baptist Health, Dr. Jonsson now includes Medicaid patients in his practice, whereas Dr. Ragland, who continues with her traditional primary care practice, still does not accept Medicaid patients and, furthermore, does not accept patients who are now insured through certain plans in Kentucky’s new insurance exchange – plans that have payment rates which she considers too low for her practice.
Although their practices are very similar, Dr. Jonsson is the more contented physician. He simply practices medicine without the economic concerns that he formerly faced. Dr. Ragland still has these concerns.
The difference is that Dr. Jonsson, along with his Medicaid patients and patients covered by exchange plans, are benefiting from the consolidation that is taking place in the health care delivery system in which hospitals and physicians are merging. These consolidated systems are able to extract greater concessions from the insurers since they become “must have” organizations when the insurers establish their provider networks.
Dr. Jonsson’s association with Baptist Health – a nonprofit health care organization with a charitable mission of caring for the poor – seems to be an ideal arrangement for meeting the health care needs of the community. So what could be wrong?
The obvious reason that Dr. Jonsson is personally financially secure in spite of seeing Medicaid patients is that Baptist Health is paying him more than he would be receiving from Medicaid or the exchange plans. How is that working? Moody’s Investors Service has downgraded Baptist Health’s credit rating citing “increased losses from an aggressive and rapid physician employment strategy.”
Under our current fragmented, dysfunctional financing system, when hospitals and physicians are trying to do the right thing, it still isn’t working in spite of the enactment of the Affordable Care Act. The current flux in primary care financing is highly unstable and likely will continue to be disruptive to traditional primary care practices. For those who say good riddance, realize two things: 1) prices are higher in the consolidated systems and will not be tolerated for long, and 2) traditional primary care practices, including community health centers, provide essential community health care services in regions often not attractive to large, consolidated health systems.
If we switched everyone to Medicare right now, the system would work, though many problems would remain because of the deficiencies in Medicare. On the other hand, if we created a well designed single payer system (an improved Medicare for all) our financing problems would be solved, and we could get on with repairing our health care delivery system – one in which both Dr. Jonsson and Dr. Ragland would take pride in their ability to meet the health care needs of their patients.