PNHP

Deloitte’s take on hospital mergers and acquisitions

Deloitte’s take on hospital mergers and acquisitions

My Take: The art of becoming big: the dilemma of mergers & acquisitions in health care

By Mitch Morris, MD, Vice Chairman and National Health care Provider Lead, Deloitte LLP
Deloitte, Health Care Current, November 12, 2013 Consolidation has transformed nearly every U.S. industry—manufacturing, retail, life sciences and hospitality — you name it. The U.S. health care industry is well into another round of consolidation. Already, according to the American Hospital Association, 3,007 hospitals (roughly 53 percent) are part of a health system. The industry went through a round of consolidation in the 1990’s but many would say that, other than better access to the debt market, the resulting health systems were, for the most part, holding companies and not operators that had a focus on economies of scale or reduced costs. According to Irving Levin Associates, in 2012 there was twice the number of hospital mergers as compared to 2009 and this shows no sign of slowing down. The Affordable Care Act (ACA) has served as a catalyst to accelerate the consolidation movement, which seems to have taken on a life of its own. Several trends are beginning to emerge across the industry: *  As reimbursement rates continue their downward trend and the costs of maintaining infrastructure and regulatory compliance march ever higher, the acute care industry seeks scale to better manage costs. Many acute care players are beginning to reduce costs through economies of scale, including the implementation of shared services, programmatic integration and consolidation, selective sourcing and addressing clinical effectiveness. The hope is that costs can be shaved by as much as 30 percent, which is certainly not a goal that can be achieved simply by headcount reduction. *  The stand-alone hospital may be an endangered species—many smaller organizations simply cannot afford to invest in keeping up with facilities, upgrading IT capabilities, attracting the best clinicians, or playing an active role in the emerging payment model innovation game. Nor do they all have the market clout to be considered essential players in narrow health plan networks. As margins shrink and access to capital becomes more difficult, even hospitals in affluent communities are feeling the pinch. *  Health plans, which also continue to consolidate, are dipping their toes into the provider business through the acquisition of medical groups. Many are also developing capabilities to manage population health. So is bigger better? How big is big enough? And can a system be too big? It’s not uncommon for mergers to fail to produce expected benefits for the new organization or the communities they serve. But there is some data to suggest that, by some measures of performance, hospital acquisitions do produce a benefit. A Deloitte Center for Health Solutions report, Hospital Consolidation: Analysis of Acute Sector M&A Activity, recently studied hospitals that were acquired in 2007 and 2008 and found that, over several years, the acquired hospitals had increased volumes and improved margins compared to a cohort of similar size (case mix adjusted) that was not acquired. The benefit was most pronounced when the acquirer was a national chain as compared to a regional system. We are quickly moving toward needing a larger scale to successfully compete. In the 90’s we did not have the same economic or legislative imperative to achieve higher value in a lower cost structure. Now we do. And those organizations that don’t get both the art and science of this transition are likely to find themselves in a difficult position. **** An online poll of Health Care Current readers (results as of 11/12/13, 1:47 PM EST): There are many factors driving consolidation in health care, but I believe the greatest is… 37.84%  Margin constraints such as declining reimbursement rates and costs of infrastructure 10.81%  The increasing complexity of regulatory compliance 51.35%  Companies vying to remain in a competitive market position 00.00%  Consumer demand 00.00%  Innovation and new technologies http://www.deloitte.com/view/en_US/us/Insights/Browse-by-Content-Type/Newsletters/health-care-current/4a2992c0bab42410VgnVCM3000003456f70aRCRD.htm Deloitte report: “Hospital Consolidation: Analysis of Acute Sector M&A Activity” (26 pp): http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Center%20for%20health%20solutions/us_dchs_2013HospitalConsolidation_05292013.pdf

Comment:

By Don McCanne, M.D. This Deloitte report reveals that hospital merger and acquisitions are occurring at an accelerated pace. Is that good or is that bad? The answer depends on whether you believe that hospitals should be run like businesses, trying to obtain competitive advantages in the health care marketplace, or if you believe that they should be run as a service organization, emphasizing patient care as its predominant role in the community. Consolidation through merger and acquisition increases market clout. It is anti-competitive, giving the merged entity a larger share of the market. Because of the ability to negotiate better rates, prices go up without the need to provide additional services and amenities that might be more attractive to patients. There is less need to improve quality  when competitors are less able to increase revenues that might be allocated for their own quality improvements. Private sector consolidation leading to oligopolies or monopolies result in the opposite of what markets are supposed to bring us. They result in lower quality and higher costs. Yet health care reform is supposed to bring us higher quality at lower costs. Maybe we overuse the example of a fire department, but it is a useful analogy. We think of the fire department as a service organization, always there when we need it to put out fires or to perform other community service functions. We don’t think of it as a business that competes in the marketplace. We don’t shop for fire services based on price and quality. We simply pay for them through the tax system, and we expect that the fire personnel will continue to take pride in the services that they provide to the community. Health care should be the same. Hospitals should be service organizations, always there for when we need them. Instead of us shopping prices, whether directly or through our insurers, they should be financed through the tax system – using global budgets just as fire departments do. And quality? That is automatic and stems from the fundamental moral fiber of dedicated health care professionals, as long as they are not corrupted by the business element that is increasing its presence to fulfill its mission of using private market business tools, such as consolidation, to maximize market share. Yet, consolidation of a public service entity can be used to improve efficiency, quality, and value. The readers of Deloitte’s Health Care Current likely represent the business oriented element in health care. It is interesting to see the response of the online poll of what they believe is the greatest factor driving consolidation. A majority believe that it is due to the business goal of trying to achieve a better market position. A large minority believes that it is due to declining margins – lower payment rates and higher infrastructure costs. A few believe that it is due to greater regulatory complexity. In general, these concerns that encourage greater consolidation are more business concerns rather than patient service concerns. What is particularly revealing is what these health care businessmen do not believe are contributing to efforts to consolidate. They do not believe that innovation and new technologies are primary driv ers, though they continually tout them as being one of the great products of a business economy. When service is the goal, new innovation would be adopted based more on patient benefit rather than on business opportunities afforded by the technology. In a service model, efficiency could be improved by consolidation if efforts are made to improve efficiency by assuring optimal capacity – neither excess nor deficient capacity. Most impressive in the current phase of health care evolution, wherein the health care business community is foisting on us consumer-driven health care, is that not one of these businessmen believe that consumer demand is a major reason for consolidation. It is not about the patient; it’s about businesses and markets. We need to change that. We could if we adopted our own single payer national health program, dedicated to patient service.

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Do MedPAC commissioners understand ACOs?

MedPAC Toys with Asking ACOs to Assume Some Risk

By Kerry Young
The Commonwealth Fund, November 7, 2013 Medicare may need to ask accountable care organizations (ACOs) to accept some financial risk as part of a larger effort to make health care both more effective and less expensive, members of the Medicare Payment Advisory Commission (MedPAC) recently said. While not making an official recommendation, many MedPAC members said that they favored increased use of a two-sided approach for accountable care organizations, meaning that they enter arrangements in which they would share in both potentials savings and losses. The alternative is a one-sided arrangement, with no potential for shared losses for the ACOs. “Ultimately, these ACOs need to be accountable for delivering on outcomes including cost lower than fee-for-service,” which is Medicare’s more traditional payment model, said MedPAC member Scott Armstrong of Group Health Cooperative in Seattle. Several MedPAC members said that medical practices and hospitals would need time to adjust to the notion of risk-sharing, and should be allowed some time to operate under agreements that only shared savings to adjust to this new model. MedPAC members also stressed the need for ACOs to build greater ties with the people whose medical outcomes will determine the success of cost-sharing models. “How in the world can a group be accountable for care for a population of patients that they don’t have a relationship with?” asked MedPAC Commissioner Armstrong. MedPAC Chairman Glenn M. Hackbarth said that policymakers will need to keep in mind what payment alternatives remain for medical practices and hospitals in designing any changes for ACOs. The old traditional Medicare fee-for-service model encourages “a volume-focused business,” he said. “For a voluntary ACO, you have got to make the terms really delicious” to compete widely against the model, he said. But, the success of the ACO program may not rest on how common they become, he said. The ACO programs may be most attractive to physician groups, and less so to hospital groups and larger university health programs, he added. “If all of the academic medical centers are out, if there are no hospital based ACOs, if they are all sponsored by physician organizations, is that necessarily a bad thing?” Hackbarth said. “I could imagine that, in fact, that may be ultimately the most sustainable model on an ACO, and trying to jimmy the rules so that it attractive to academic medical centers may compromise your design.” http://www.commonwealthfund.org/Newsletters/Washington-Health-Policy-in-Review/2013/Nov/November-11-2013/MedPAC-Toys-With-Asking-ACOs-to-Assume-Some-Risk.aspx?omnicid=16

Comment:

By Don McCanne, M.D. MedPAC, the Medicare Payment Advisory Commission, has the important function of providing to Congress and CMS advice regarding Medicare payments. Since MedPAC is where the action is, it is helpful to understand the committee members’ views on what has been touted as the most important provision of the Affordable Care Act that would provide greater efficiency and lower costs in health care – the accountable care organizations (ACOs). Based on the members’ comments, it is not difficult to see why others are having difficulties designing ACOs. Although they suggest that the ACOs should bear some financial risk for the services provided, they express caution in making the transition since physicians are apt to prefer the current fee-for-service model – a model that ACO advocates wish to replace – over a model that is designed to reduce spending partly by placing physicians at financial risk. Why would a physician who is being paid for all of the services being provided want to replace that with a model that extracts financial penalties for providing that same level of care? Also it is somewhat insulting to the physicians who believe that are trying to provide optimal care to be accused of pushing extra services purely for the money (likely some do, but my personal observation is that such behavior is uncommon). ACOs are also a bizarre model of coordinated care since the participating providers are selected by the providers themselves and not by the patient. It is difficult to see how the ACOs could be fully accountable for the patients’ care when the patients are not bound to the ACOs. How can you make the physicians responsible for the spending when the patient is referred for a $400 imaging study within the ACO, but the patient decides to get a $2000 study outside of the ACO? MedPAC Chairman Glenn Hackbarth even suggests that academic medical centers and other hospitals should be left out of the ACOs, leaving them to physician organizations. When the ACOs are supposed to achieve success by bundling services for a given clinical circumstance, such as heart valve replacement or a kidney transplant, how do you leave the hospital out of the bundled package? And do we really want academic medical centers to be excluded from the financing model? Of course, the insurers have been very interested in taking over the management of the ACOs, but their concept is not much different from their old managed care models in which the patients are made captive through the insurance plans they have – a model that angered patients and physicians alike. It is fine to look for efficiencies and quality improvement in health care delivery, but we should not let the ACO craze distract us from advocacy for a model that we already know improves quality and contains costs – a single payer national health program.

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Common sense health care for all would save money, lives

By Bill Roy
The Topeka Capital-Journal, Nov. 10, 2013 Americans don’t have to suffocate themselves with wasteful health care spending that does not do the job. The system I describe below would save Americans nearly $1 trillion annually. Budgets from households to governments could be balanced. And, oh, it is so simple and sure! Health care would be administered by states and other independent jurisdictions within principles set forth by the federal government, and required for federal matching funds. States could qualify for funds on their schedule. The first principle is universality. Every American should be able to access health care without payment at the point of delivery within the state or jurisdiction in which he or she lives. The state and federal government will pay the bills from taxes imposed and collected. Each state may decide upon which taxes to levy, and deductibles and co-payments within reason. The second principle is comprehensiveness. The system must provide those services that are medically proven effective. Within this broad requirement each state will decide what it pays for. Many of the nostrums you presently see advertised on television, you would have to buy on your own. The third principle is availability and accessibility. We cannot provide everything for everyone everywhere. But we can remember there are people west of US-81 highway, and to the extent possible provide timely services for them or arrange to get them to where services can be provided. The fourth principle is one’s right to care must be portable. It should go where you go. That does not mean you can fly to Switzerland and order up a panoply of services which your state automatically pays for. But it does mean if you are in Switzerland and become ill, your state will take responsibility to pay bills within limits provided by state legislation. The fifth and key principle is the health care system must be publicly administered. In 2010, we spent $8,233 per person for health care, at least $3,000 more than any other developed nation. They had universal care, which reduces doctors’ business offices from 10 rooms to one. Currently, health insurance companies take 10 to 30 cents out of each dollar for sales, administration and dividends. Medicare is administered for less than 5 cents on the dollar. Obamacare will attempt to recover overpayments to insurance companies — lots of luck. It also throws money at Medicaid (a federal-state program for the medically indigent). But states may in turn assign the poor (340,000 KanCare patients) to for-profit insurance companies, which benefit from administering or providing their care. For dessert, this system will let you choose your doctor and hospital — as does Medicare today. The above proposals have many components of Medicare for all. But, most of all they are the principles of Canada’s Medicare, a program that has worked (they live two years longer, and have lower new-born and infant mortality than we do) for about 50 years for two-thirds our cost. A caveat: Every nation in the world is struggling with health care costs because medicine can do more each day to help people. Some scientific advances save money but many, such as the joint replacements that weren’t done 40 years ago, cost more. There would be new taxes but overall costs would go down dramatically. First and foremost, we’d avoid thousands of deaths each year that result from no or delayed medical care. And by opening the door to those who struggle to get care, we would take our place among the civilized nations. Bonus: For anyone who believes health care is too expensive, The Wall Street Journal reported in 2006 that United Healthgroup was about to pay retiring CEO William W. McGuire $1.767 billion. Our health care system produces one thousand seven hundred and sixty-seven million dollars for one person, and bankruptcy for thousands. Bill Roy is a retired physician and former member of Congress. He has a law degree and lives in Topeka. http://cjonline.com/opinion/2013-11-10/bill-roy-common-sense-health-care-all-would-save-money-lives

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Anyone skeptical of National Health Insurance should read this

By Henry Blodget
Business Insider, Nov. 10, 2013

The American healthcare system sucks.

We pay more for healthcare than any country in the world and we only get average results. And tens of millions of Americans have no health insurance.

Our latest attempt to address this situation, Obamacare, is a mind-numbing kluge of laws and policies that is off to a very rough start. And even if Obamacare ends up working, it will only fix part of the problem.

The problem, as a ground-breaking article by Steve Brill made clear, is that America’s healthcare providers and insurers treat people differently. If you’re lucky enough to be included in a big insurance plan provided by a huge entity with a lot of negotiating leverage (such as the federal government), you pay low rates and low prices. If you’re unfortunate enough to be in a high-risk group or not to be included in any plan, you pay sky-high prices. Or you get all your “healthcare” from the emergency room and, thus, lay the costs off on everyone else that way.

The answer, as Brill’s article also made clear, is a fully national health insurance system, in which all Americans are covered in the same massive group and for-profit insurers and healthcare providers can’t pick and choose who to cover and how much to charge them. This system would effectively extend the current Medicare and Medicaid system to the whole population, and, in so doing, make it even more efficient. As in some other countries with national health insurance, Americans insured under this system would also be free to buy additional healthcare services, including additional private insurance. The system, in other words, wouldn’t limit anyone’s ability to pay for “premium” heathcare services if they chose to. But a lot of Americans still hate that idea. They have been told since birth that “national healthcare” is a disgrace. They have been brainwashed so thoroughly by America’s vastly profitable medical industrial complex that their resistance to reality and change has become a religion. Anti-change advocates don’t assess facts. They just claim, absurdly, that America currently has “the finest healthcare system in the world” and then cite horror stories about sick people dying in streets because they have to wait so long to get the (terrible) healthcare services available to them under “socialist” healthcare.  (This horror story, naturally, is presented as the polar opposite of our current system, In fact, in many ways, it’s similar. Today, in America, many people without health insurance spend their lives waiting until they get so sick that they can go wait in emergency rooms. And then our often wildly profitable hospitals pay for their care by, effectively, sending their bills to everyone else.)

Anyway, any American who is skeptical about national health insurance but has an open mind should read this testimonial from another American who is currently living in a country with national heath insurance — Britain.

The American, Dawn Rutherford Marchant, lives in the UK with her family. She was recently asked on Quora to describe her life there. Amid this description (full answer here), she had the following to say about Britain’s national healthcare system:

“A massive advantage of living here is the National Health Service.  If an American could understand it, they would be amazed by its magnificence.  

“In this past week I have seen an ENT consultant surgeon and have had surgery scheduled in a few weeks’ time.  There was no direct cost to me.

“Tonight my GP (family doctor) rang at 8pm to check in on another health issue.  She is chasing a consultant to authorise a new medication and will ring me back next week.  This did not cost me a penny.  

“So, three doctors and one medical procedure without a form to fill in or a bill to pay.  Pretty damn impressive stuff — yes, I know it is in our taxes but the system works well.  It is ‘from birth to grave’ care all woven together into one service — ambulance to GP to hospital to nursing care.  There are all kinds of synergies created by such a system.  It is to be deeply respected, emulated, and not feared.”

The British National Health Service was created shortly after World War II, when everyone began to realize what a mess the system of private and municipal insurance was. It was a political challenge to get it passed — not surprisingly, those doing well under the status quo pushed back — but it passed.

The NHS now costs the UK less than half as much per person as the U.S. system does. It is paid for with an ~11% tax. The contributions equate to about $3,000 a year per person.

In addition to the National Health Service, the UK also has private insurers, which about 10% of the population choose to use. In other words, the British system has all the benefits we say we love so much — the ability to pay more for premium heathcare if we want it — and it also covers the basics for everyone in the country at half of our per-capita costs. Not bad! Henry Blodget is co-founder, CEO and editor-in-chief of Business Insider. Read more: http://www.businessinsider.com/national-health-insurance-2013-11#ixzz2kLtV1Y60

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A Doctor With a Cure: 'Medicare for All'

By John Nichols
The Nation, Nov. 11, 2013

Gene Farley and I shared a deep affection for Tommy Douglas, the Baptist preacher-turned-statesman who as the leader of Saskatchewan’s Cooperative Commonwealth Federation established the framework for what would become Canada’s single-payer national health care system.

Douglas, who is often recalled as “the Greatest Canadian,” had a congenial style that belied his determination to address social and economic injustices he knew to be immoral.  “The inescapable fact,” he argued, “is that when we build a society based on greed, selfishness, and ruthless competition, the fruits we can expect to reap are economic insecurity at home and international discord abroad.”

Paraphrasing Tennyson, Douglas roused Canadians with a promise: “Courage, my friends; ’tis not too late to build a better world.” That line always came to mind when I was with Gene, who died Friday at 86.

Gene was an internationally renowned physician, an originator of family practice residency programs and innovative public-health initiatives who finished a distinguished academic career as chair of the Department of Family Medicine at the University of Wisconsin.

Yet, his great passion was as a “build a better world” campaigner. The man who proudly recalled joining the March on Washington for Jobs and Freedom in 1963 was still marching for those same causes in 2013.

With his beloved wife, Dr. Linda Farley, Gene devoted two decades of “retirement” to advancing a broad justice vision that — after Linda’s death in 2009 — could be seen in the remarkable ecological, agricultural and community-building work of the Linda & Gene Farley Center for Peace, Justice and Sustainability.

Because of their professional background, Gene and Linda focused particularly on advancing the cause of universal health care. With their longtime friend Dr. Quentin Young, they were early and enthusiastic leaders of the “Physicians for a National Health Program” movement, which for decades has encouraged US leaders to develop  “an expanded and improved version of Medicare (to) cover every American for all necessary medical care.”

The man who refused offers of prestigious international positions because he felt a duty to carry on the battle to reform the US health-care system knew understood the challenge of seeking that reform at a time “when society is going toward selfish extremes… when (governments) pay anything to build up the military but don’t want to give to the social good.” Still, he remained “fantastically optimistic.” And that optimism was often rewarded – especially with the 2012 election of his friend and ally Tammy Baldwin as the junior senator from Wisconsin.

Though Farley warned that the Affordable Care Act, with its deference to insurance companies, was more complicated and costly than need be, he hoped that the passage of the act would serve as an important step on the road to a creating a single-payer system in the United States. As we traveled in eastern Canada together last month — on a Nation Cruise where Gene delighted in comparing notes with his dear friends Dr. Michael Klein and Bonnie Sherr Klein — we spoke a good deal about the difficulty of implementing what has come to be known as “Obamacare.”

Yet, Gene, “fantastically optimistic” as ever, recalled that Canada went through decades of bitter wrangling before finally establishing a universal health care system that delivers longer life expectancy more efficiently and at a lower cost than the American system. “We have to be patient, but we have to be determined,” he said, explaining that the establishment of the principle of “health care as a right” is not just a medical mission, not even an economic or social responsibility.

It is, Gene said, “about morality.”

Canada came to recognize that morality, embracing the vision of Tommy Douglas.

And it is right and necessary to expect that America will come to recognize that morality, embracing the vision of Gene Farley.

John Nichols is Washington correspondent for The Nation and associate editor of The Capital Times (Madison, Wis.).

http://www.thenation.com/blog/177106/doctor-cure-medicare-all#

PNHP note: A memorial service for Dr. Farley was held in Madison on Nov. 10. Two additional obituaries of Dr. Farley have been published, one in the Wisconsin State Journal and the other in The Capital Times.

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Editorial: Who first said, “You can keep the insurance you have”?

Editorial: Who first said, “You can keep the insurance you have”?

By Don McCanne
November 8, 2013 Considering our national health expenditures, our health care financing and delivery systems are a disaster. It is fully apparent that the Affordable Care Act will fall woefully short of what is needed, and even offset some of the minimal gains with changes that will make many of us worse off by passing more costs directly onto us when we become ill (higher deductibles and other cost sharing), and by further limiting our choices of physicians and hospitals (shifting to narrow provider networks). At a time that it is imperative that we address policy issues to try to straighten up our system, we abandon reason and propel forward with politics as usual. President Obama’s political enemies, well supported by the media – including editorialists – are now expressing shock, shock that he lied to us when he told us that we could keep the insurance we have, if we like it. He was not the author of this sound bite provided to him for political campaigning, so where did it come from? Let’s go back five years, beginning before Sen. Obama was even the Democratic nominee for president, and look at some of our Quote of the Day messages beginning then:

Is “keeping the insurance you have” your choice?

By Don McCanne
February 6, 2008 How many of you, under age 85, have the same health insurance plan that you had twenty years ago? None? Why did you change? (Several possibilities listed.) What is the obvious conclusion? Health insurance coverage on a continual basis is practically non-existent in the private insurance market. In almost all of the instances listed, the insured individual was not granted the option of “keeping the insurance you have.” Most polls on health care reform continue to ask many of the same questions as they have over the past couple of decades, but there is one new question. The pollsters are now asking if you support reform that would allow you “to keep the insurance you have.” For healthier individuals who believe that they have good insurance, this concept polls very well. In fact, the other questions in the polls are now tailored to reinforce this simple concept. https://www.pnhp.org/news/2008/february/is-keeping-the-insurance-you-have-your-choice

Statement of Common Purpose

Health Care for America Now!
(Undated, but referenced in 2008) A choice of a private insurance plan, including keeping the insurance you have if you like it… http://healthcareforamericanow.org/about-us/statement-of-common-purpose/

“Keeping the insurance you have” – Don’t believe it!

By Don McCanne
July 11, 2008 Pause for a minute. Think back to the insurance you had twenty years ago. Remember? Now do you still have precisely that same coverage? Unless you are over 85 and have been in the traditional Medicare program for the past twenty years, it is highly likely that you do not. So why do you no longer have the better coverage that you had twenty years ago? You may have changed jobs, likely more than once, and lost the coverage that your prior employer provided. Your employer may have changed plans because of ever-increasing insurance premiums. Frequently your insurer introduces plan innovations such as larger deductibles, a change from fixed-dollar co-payments to higher coinsurance percentages, tiering of your cost sharing for services and products, reduction in the benefits covered, dollar caps on payouts, and other innovations all designed to keep premiums competitive in a market of rapidly rising health care costs. You may have lost coverage when your age disqualified you from participating in your parents’ plan. You may have found that health benefit programs have been declining as an incentive offered by new employers. Your children may have lost coverage under the Children’s Health Insurance Program when your income, though modest, disqualified your family from the program. Your union may not have been able to negotiate the continuation of the high-quality coverage that you previously held. Your employer may have reduced or eliminated the retirement coverage that you were promised but not guaranteed. Your employer may have filed for bankruptcy without setting aside the legacy costs of their pensions and retiree health benefit programs. You may have decided to start your own small business and found that you could not qualify for coverage because of your medical history, even if relatively benign, or maybe your small business margins are so narrow that you can’t afford the premiums. You may have been covered previously by a small business owner whose entire group plan was cancelled at renewal because one employee developed diabetes, or another became HIV infected. Your COBRA coverage may have lapsed and you found that the individual insurance market offered you no realistic options. You may have retired before Medicare eligibility, only to find that premiums were truly unaffordable or coverage was not even available because of preexisting medical problems. https://www.pnhp.org/news/2008/july/keeping-the-insurance-you-have-dont-believe-it

Will grandfathering save our current private plans?

By Don McCanne
June 23, 2010 The opponents of reform, especially the Republicans in Congress, are making a big deal out of the fact that the Affordable Care Act breaks President Obama’s promise that you will be able to keep the insurance plan you have. The Obama administration is countering by publicizing the new regulations that will allow plans in place on March 23, 2010 to be grandfathered, supposedly assuring that you will be able to keep your plan if you had it on that date. Actually, this is a silly debate. As explained in my comment two years ago, except for those individuals on Medicare or other fiscally sound retiree programs, almost no one gets to keep the insurance he or she has. Rather than stabilizing existing coverage, the regulations that would grandfather plans make it less likely, in an environment of increasing health care costs, that existing plans would continue to be offered without significant changes. In an effort to make the insurance plans more affordable, further adjustments in deductibles and coinsurance are almost inevitable, and the ever-changing insurance marketplace will surely result in changes in insurance companies selected. Insurance price shoppers, who are mostly healthy, will be much more sensitive to size of the premiums than they would be to cost sharing; this is precisely what has happened throughout the individual market. These pressures would accelerate the decline in grandfathered plans. “Keeping the insurance you have” was only a slogan used to market the reform proposal. It wasn’t a serious long term strategy. Instead of wasting time in another political dogfight – this time over grandfathering – we should move forward with supporting policies that will work for everyone – like a single payer national health program. https://www.pnhp.org/news/2010/june/will-grandfathering-save-our-current-private-plans Comment, November 8, 2013: “Liar!” Is that the best lesson that we can learn from President Obama’s decision to accept the recommendation of his political advisers to use the sound bite, “You can keep the insurance you have, if that’s what you want”? The fact that this is the framing of the current keep-the-insurance-you-have discourse demonstrates not only how acrimonious the Washington political environment has become, it also shows the ineptitude of the media. Not only do they buy this framing when there is a far more compelling message in this mess, they also serve as dupes, propagating the biting, counter-productive message of the Obama opponents. Repeating my comment from 2010, “Instead of wasting time in another political dogfight… we should move forward with supporting policies that will work for everyone – like a single payer national health program.” That’s the lesson we should learn.

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Corporate influence on medicine

By Andrew D. Coates, M.D., F.A.C.P.
WAMC Northeast Public Radio, Nov. 8, 2013 Physicians tend to be a conservative group, in the sense that we’re cautious when it comes to new ideas. For example I find myself very reluctant to prescribe medications that have been on the market for only a few months or a short year or two, no matter what benefit their manufacturer’s claim they offer. Caution seems a better practice when it comes to our patients, especially if hundreds of millions have used a traditional treatment without harm, while the new medication in question is so slickly advertised.
 
Over the last couple of years, medicine as a profession has stood on the shore of a kind of health-systems continental drift. As a profession, we doctors have tried to keep doing what we have been doing, perhaps with a belief that our coastal province will eventually come (back) under our individual control.
 
It is almost as if we would so prefer to embrace a sedimentary but predictable process, a layering of generations of responsibility within our profession, measured in geological time, that we are loathe to try to decipher our own experience.
 
Beneath the surface, the continent of medical care is being subsumed into the continent of corporate power and profit. A few aspects of what we can do for patients have been uplifted, but most have been subsumed and driven deep underground or else sheared in half or even pulverized into pieces. The impact of these changes upon caring for patients comes not over a geological epoch but over a short decade or two. It is a worldwide process that now touches nearly every physician and nurse in the United States. While a few physicians have taken the opportunity to do well, rather than good, most of us head to work with the motivation that we can improve the health, and thus entire lives, of other human beings. If there are a few who have cashed in on business schemes and then gone on, for example to CEO work, those doctors remain the exception, not the rule, in our profession. Most of us head early to the office or clinic or hospital, and often keep extra hours at our work.
 
Physicians see the work of our profession as a call to service to humanity. Corporate executives in the giant health care enterprises that dominate our country see us quite differently. They see us not so much in a profession, but in a “position.”
 
These corporate “positions” are roles defined by the needs of the institution and its financial viability, not the talents, dedication or human qualities of individual caregivers. Similarly, patients are seen not for their needs but for the revenue stream they will provide. The plate tectonics metaphor makes sense to me because underneath it all, deep underground, lies a great collision of human values.
 
Will corporate medicine succeed in “profitizing” the caregiving relationship? Dr. Julian Tudor Hart, the great British physician, put forward a thesis that the doctor-patient relationship is a productive partnership. Together we work toward a product that has great value to ourselves personally as well as the society as a whole, the health of an individual. This fundamental character of caregiving may be seen as a human enterprise, but clearly it does not and cannot lend itself to the immediate extraction of profit.
 
This contradiction is a problem for corporations. It is even more of a problem for patients. And it is a problem for the profession of medicine. The effort to extract a profit from the doctor-patient relationship amounts to an effort to end it as a productive partnership and re-establish it as an adversarial money-driven contest.
 
The cause of profiteering from the care of human beings has been pushed further along by the Affordable Care Act. A new wave of corporate health care investment and conglomeration has been unleashed. In turn, we find a new escalation of user fees, co-pays, co-insurance, high deductibles, in-network fees and out-of-network fees. And with these a tangle of unintelligible rules and fees the prevalence of underinsurance – the phenomenon of having health insurance that doesn’t cover our health needs – is growing.
 
To capture revenue, health care corporations add administrators, finance experts, deal-makers and supervisors in a mushrooming byzantine bureaucracy. Patients simply try to hold on to their bank accounts. And physicians now begin to see a struggle to hold on to our profession. True to our conservative nature, and skeptical of the changes afoot, physicians want to get back to caregiving. The patients want the same. I believe we physicians need to partner with our patients, not only in the exam room, the operating room and at the bedside.
 
With earth-shaking changes altering the landscape of health care, to protect our hard-earned ability to provide truly expert care to our patients, the most conservative thing medicine as a profession can do is to start from the health needs of our patients – as individuals and as a population. We must partner with our patients to demand that our democracy provide its people with a health system without user fees, publicly pre-paid, so that every patient’s necessary care is freely available – for each and all.
 
Dr. Andrew Coates practices internal medicine in Upstate New York. He is president of Physicians for a National Health Program.
 
You can listen to Dr. Coates’ radio broadcast here: http://wamc.org/post/coates-corporate-influence-medicine

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Obamacare: consider the alternative

By Donald Broder, M.D.
The New York Times, Letters, Nov. 8, 2013 Re “Despite Fumbles, Obama Defends Health Care Law” (front page, Nov. 7): Nicholas D. Kristof  points out that without universal health care, many of us die prematurely. But before we solve this terrible problem, we have to grapple with our confusion and ambivalence as to what, if any, responsibilities we have for one another. Do we just cluck our tongues and blame Richard Streeter, featured in the column, for not buying insurance? Do we let him seek care at a hospital emergency room knowing that it will be far more expensive and far less effective than timely care would have been? Do we construct a Rube Goldberg-worthy health plan to protect the profits and inefficiencies of every powerful lobby group except that of “we the people” who need care? So far, the answer seems yes. So even with the benefits the Affordable Care Act is bringing, we will still have tens of millions without care, we will still be subsidizing health insurance companies, and we will still be throwing money down a rathole. Until we recognize that we are our brother’s keeper and build a health care system funded by taxes we all pay and delivered by a regulated health care community — improved Medicare for all — we will continue to read tragic stories like the one Mr. Kristof gave us. Dr. Donald Broder is a psychiatrist. He resides in Studio City, Calif. http://www.nytimes.com/2013/11/08/opinion/obamacare-consider-the-alternative.html?_r=0

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A 5% commitment for Medicaid?

Professionalism and Caring for Medicaid Patients — The 5% Commitment?

By Lawrence P. Casalino, M.D., Ph.D.
The New England Journal of Medicine, November 7, 2013 Medicaid is an important federal–state partnership that provides health insurance for more than one fifth of the U.S. population — 73 million low-income people in 2012. The Affordable Care Act will expand Medicaid coverage to millions more. But 30% of office-based physicians do not accept new Medicaid patients, and in some specialties, the rate of nonacceptance is much higher — for example, 40% in orthopedics, 44% in general internal medicine, 45% in dermatology, and 56% in psychiatry. Physicians practicing in higher-income areas are less likely to accept new Medicaid patients. Physicians who do accept new Medicaid patients may use various techniques to severely limit their number — for example, one study of 289 pediatric specialty clinics showed that in the 34% of these clinics that accepted new Medicaid patients, the average waiting time for an appointment was 22 days longer for children on Medicaid than for privately insured children. Physicians have good reasons for not accepting Medicaid patients, as I learned from direct experience as a member of a nine-physician primary care practice in California. We accepted Medicaid patients, but it was difficult. Medicaid’s payment rate was very low — we lost money on each Medicaid visit. When referrals were necessary, we often had to personally ask specialists to accept our patient. Administratively, it was not simple to obtain payment from Medicaid for our services, in part because some patients frequently moved between eligibility and ineligibility for the program. In addition, it was time-consuming for our physicians and staff to deal with the Medicaid pharmaceutical formulary and to obtain prior authorization for Medicaid patients to see specialists and obtain imaging studies. There are additional reasons — beyond low payment rates, administrative complexity, and problems obtaining specialist care — why physicians may be reluctant to see Medicaid patients. Medicaid patients often have complicated behavioral health, transportation, and social service needs that require physician and staff time. Nevertheless, there is a fundamental reason why physicians should strongly consider providing care for at least a reasonable number of Medicaid patients. It is a core professional principle that physicians should put the patient’s interest first; refusing to care for vulnerable, socioeconomically disadvantaged Medicaid patients seems incompatible with this principle. Many medical schools ask their students to accept the World Health Organization’s Declaration of Geneva (a modified version of the Hippocratic Oath), which states in part that “I will not permit considerations of age, disease or disability, creed, ethnic origin, gender, nationality, political affiliation, race, sexual orientation, social standing or any other factor to intervene between my duty and my patient.” Physicians who are reluctant to provide care for Medicaid patients can argue, with justice, that policymakers are trying to make medicine as market-driven as possible, that physicians are increasingly expected to respond to market incentives and market constraints, and that no business in other sectors of the economy is asked to provide a service that loses money year after year. Many physicians, however, earn very high incomes, and some of the highest-paid specialties are the least willing to care for Medicaid patients. Would it be reasonable to ask all physicians to commit to providing care for enough Medicaid enrollees so that at least 5% of each physician’s practice consisted of Medicaid patients (assuming sufficient demand)? We live in an era in which, for better or for worse, market-based solutions are dominant and policymakers tend to view physicians as self-interested actors. Little or no attention is paid to physician professionalism or to the possible effects of policies on professionalism. Policies that are based on this view may be justifiable if many physicians are indeed seeking to maximize their incomes and refusing to accept even a slight reduction in income as the price for helping to provide care to the most vulnerable patients in our society. A 5%-commitment campaign would be a meaningful, highly visible demonstration of physician professionalism — of putting patients first. http://www.nejm.org/doi/full/10.1056/NEJMp1310974

Comment:

By Don McCanne, M.D. The expansion of Medicaid for low-income patients is one of the more troublesome features of the Affordable Care Act. Because of low payment rates, many physicians, especially high-income specialists, already refuse to accept Medicaid patients. Increasing the burden on those physicians who do accept Medicaid is apt to result in a pushback wherein access may be further impaired. What can be done? Lawrence Cassalino has provided us with an excellent description of the dilemma, but I’m afraid that his 5% solution – physicians devoting 5% of their practices to Medicaid – will fail since it depends on physician professionalism, of putting patients first. After a career of trying to obtain specialized care for Medicaid patients, it was quite clear that that level of professionalism was not ubiquitous in my community, and I doubt that it is in most other communities. Relying on the pure goodness of physicians will not work because there are not enough so oriented to meet the need. One important measure in ACA is the expansion of funding for federally qualified health centers. These centers improve access for vulnerable populations, though they still have difficulties obtaining adequate support of specialists. Today, the government announced a $150 million grant to assist these community health centers. $150 million? Unless the government becomes serious about community center funding, and unless something is done to attract specialists to support these centers, we cannot expect them to fill the void either. There is a clear solution. We could establish a single payer national health program in which everyone has the same coverage and access to care. That may or may not renew the commitment of today’s physicians to professionalism, but at least it would create the appearance that patients would be placed first. For individuals considering a future career in medicine, professionalism would be a given.

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Petty appointed executive director of PNHP

FOR IMMEDIATE RELEASE
November 7, 2013

Contact: Mark Almberg, communications director, mark@pnhp.org

Physicians for a National Health Program announced today that Matthew Petty has been appointed executive director.

Petty, who has most recently served as the group’s director of operations, will be responsible for mobilizing PNHP’s membership in advocating for single-payer reform at the national and state levels, growing its membership and financial base, and enhancing its outreach programs, media work and ties with coalition partners.

Of the new responsibilities Petty will assume, Dr. Andrew Coates, PNHP’s president, said: “Our new executive director will coordinate a remarkably talented team of professionals in our national office.”

Pointing out that public debate over health care remains acrimonious and that PNHP’s perspective is often sought, Coates added: “The PNHP Board of Directors chose Matt as executive director with an awareness that we have entered a new period characterized by the growth of private, profit-centered corporate influence over the practice of medicine.

“At a time when we need to develop a new generation of physician leaders, Matt, only 30 years old, has grown with the organization. He has proven himself by taking day-to-day responsibility to safeguard our ability to fulfill our mission and grow our organization.”

Following his appointment, Petty said, “I look forward to continuing to serve members of PNHP in this new role as we work together to achieve single payer and to restore the doctor-patient relationship, free from corporate dictates.”

Petty, a native of Fargo, N.D., majored in social policy at Northwestern University, with a special concentration in health policy. While at Northwestern, he conducted research in racial disparities in infant mortality, diversity in health professions, rural prison expansion, and Social Security. He minored in political science and obtained his bachelor’s degree in 2005. He spent time working on Capitol Hill, and has worked for PNHP for the last eight years.

PNHP is a nonprofit, 18,000-member research and educational organization of doctors who support single-payer national health insurance, or “an improved Medicare for All.” It was founded in 1986. Headquartered in Chicago, the group has become a nationally influential voice on health policy, with chapters and spokespeople throughout the United States.

Petty’s appointment became effective on Nov. 3 by action of PNHP’s national board, which met in Boston at the conclusion of the group’s Annual Meeting. The meeting was its largest gathering ever, organizers said.

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Delaware committee hears single-payer health care system bill

By Michael Chesney
WBOC-TV (Salisbury, Md.), Nov. 6, 2013 DOVER, Del. – A single-payer health care system in Delaware was what was up for discussion Wednesday night at Legislative Hall, even though the Delaware General Assembly is out of session. A single-payer system is government-run health care. The state, not private insurance companies, would handle all health care costs. HB 74 would create that system in Delaware. It was introduced back in April. But its sponsor requested it be heard outside of session. So, it was a very small crowd on-hand in the house chamber to discuss the specifics of the single-payer healthcare system plan. According to Rep. John Kowalko, D-Newark South, the bill’s sponsor, the state would pay for the system mainly through a payroll tax for employers, federal medicare and medicaid money and a personal income tax increase of 2.5 percent. “The first instinct is you’re going to increase my tax,” he said. “If you’re decreasing the current money you pay for health care, if you decrease the cost of co-pays, deductibles, if you eliminate those, you’ll find that 2.5-percent is a savings compared to what you’re paying now.” Beth Clifton, of Smyrna, is comfortable with a two-point-five percent income tax increase. She says it would probably end up costing the same as her current insurance. “I think overall it’s a good thing,” Clifton said. “I know health care costs in general have sky-rocketed. I saw my deductible go up this year. Prescription premiums went up a lot this year.” Martin Shuey came up from Bridgeville for the hearing. He’s not necessarily opposed to a single-payer system, but he has serious issues with this bill. “It all sounds good when you hear it from them. But the way it’s written is scary,” he said. “Any time you talk about one-payer systems. I’m not saying they’re bad. But they have to be controlled properly. I think that needs to be a concern for everybody.” While a few people at the hearing had questions and concerns like Shuey’s, nobody spoke in strong opposition to it. In general opponents of plans like this don’t want government this involved in health care – believing it will lead to a rationing of care. The lack of people at Wednesday’s hearing could be an indication of the traction this bill has. A similar bill didn’t go anywhere in 2012. Or the small turnout could be a result of lawmakers not actually being in session. There are plans for two more meetings on the topic. No action was taken at this meeting. Even if the bill passed in this upcoming legislative session, the system wouldn’t go into effect for a few years. http://www.wboc.com/story/23899985/del-committee-hears-single-payer-health-care-system-bill

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Why are they all saying ‘single payer’?

By Andrew D. Coates, M.D., F.A.C.P.
WAMC Northeast Public Radio, Nov. 1, 2013 Last week we saw a domestic national news cycle dominated by the “glitches” that derailed the launch of the web-based exchanges where uninsured American people and their small business employers can shop for private health insurance. This week, as stories about private health insurance continue to dominate the headlines, the term “single payer” has bobbed up with increasing frequency.
 
“Single payer” or “Medicare for All” has simultaneously appeared on the lips of many mainstream voices, right, left and center. Mostly those who say the words would like to dismiss the idea — and yet they clearly recognize that the single-payer proposal, public health insurance for each and all, is a policy proven to guarantee access, improve health outcomes and control costs.
 
The latest media flashpoint shines a light on an estimated 10 million to 15 million people who already purchase private health insurance individually. Many of these people have been getting letters from their insurance companies canceling their policies at year’s end.
 
Republicans pounced on the occasion to embarrass the president, accusing him of false promises. Mr. Obama had often claimed that under his reform, “If you like your health insurance, you can keep it.”
 
In his defense, the president explained that the Affordable Care Act places new regulation upon the insurers, that it establishes basic minimum coverage thresholds, that insurers can no longer exclude applicants due to pre-existing health conditions, that millions of people will be income eligible for Medicaid or federal subsidies to cover private insurance premiums.
 
In other words, although you might not be able to keep your woefully inadequate policy that you liked for its low premiums (but might have hated in the event you actually got sick!), there is a chance that you will get a new policy, and perhaps a subsidy toward its premium costs, something you might like after all.
 
But as an axiom from establishment politics of the 1980s runs – “if you’re explaining, you’re losing.” Hearing the president’s explanations, the Republicans stepped up their criticism.
 
The media, for the most part, has played its usual part too, repeating the talking points – “he said, she said.” Yet few journalists have pointed out that the mainstream debate, although flamboyant in style – press conferences, congressional hearings, talking heads galore – remains perfectly flat in substance.
 
The president and his party tout the virtues of private health insurance. In vociferous opposition, the Republicans and their Tea Partiers tout the virtues of private health insurance.
 
But then comes the double irony – something funny happened on the way to covering this forum. As journalists looked for the story beneath the story, they come across real human beings caught in this odd political crossfire.
 
We’re told stories about people who desperately need private insurance and are grateful for the chance to purchase it in order to escape ongoing financial ruin. Poignant articles have underscored how whole families can be devastated financially by “out of network” costs (and some by “in network” costs). We read about people whose households now live with extreme insecurity, as their employers or their insurers have cancelled their policies.
 
Private health insurance has not only failed to cover everyone, but it often proves incapable of adequately covering anyone, especially any one of us who faces a grave illness. Health insurance is not the same as health care.
 
On top of this, private health insurance is basically an enormous personal hassle – not something we like, but something we’re forced to grapple with. It’s something we’re happier to have than not have, but it’s also something we’re stuck with.
 
Everyone knows that those without insurance face high barriers to getting care and are more likely to die than those who have it. Does this explain the latest news cycle? I think not, because both Republicans and Democrats want us to buy private insurance, which erects its own high barriers – premiums, deductibles, and co-pays, for example.
 
More to the point, I’m sure that each of us – everyone listening today – knows a family member or a friend who has speculated on whether the Affordable Care Act might help them in a personal way with getting private insurance … and maybe getting to see a doctor.
 
So it’s a double-edged sword. Private insurance, while considered desirable by many, introduces its own insecurities and uncertainties into our daily lives. I think that is what’s driving the mainstream discussion. And if we dig a little deeper, when it comes to health care, everyone knows that we are all in this together.
 
If we’re all in this together, why not a system based upon that very idea? Why not a truly universal, improved Medicare for All? And that explains why we have all of a sudden also heard so many voices, right, left and center, comment upon the single-payer solution to our health crisis.
 
Dr. Andrew Coates practices internal medicine in Upstate New York. He is president of Physicians for a National Health Program.
 
You can listen to Dr. Coates’ radio broadcast here: http://wamc.org/post/andrew-coates-why-are-they-all-saying-single-payer

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